Fact: You cannot exactly predict an uncertain future.

But in the face of such uncertainty, how can you make accurate, successful predictions about the cost of systems that have yet to be built or projects that have yet to be launched? How can you mitigate the risk in your cost and schedule estimates and eliminate unforeseen “surprises” in cost or schedule overruns?

One way is to assume exact knowledge of the system’s design and then make a best-guess about inevitable changes to the system. These best guesses come down to a specific number, generally bounded by a contingency amount. But cost estimates are not deterministic. They are forecasts that have a range of possible outcomes.

Understanding the implications of these ranges leads to more accurate decisions in predicting budgetary success. Crystal Ball® software helps you determine the ranges and likelihood of achieving success in your cost estimations.

Crystal Ball is a Microsoft® Excel®-based suite of analytical tools that includes Monte Carlo simulation, optimization, and forecasting. With little effort, you can apply these advanced analytical techniques to your new or existing spreadsheets to create more accurate cost and schedule predictions and better informed financial decisions. With Crystal Ball, you can:

• Replace min/max estimates with more accurate range of all possible outcomes
• Reduce the time required to produce estimates,
• Eliminate multiple manual “what if” estimates,
• Mitigate your cost and schedule risks,
• Gain immediate insight to the driving inputs and output variations,
• Make knowledgeable decisions on where to focus resources, and
• Provide decision-makers with factual data that shows the risk associated with each choice.

Key features of interest to your industry include sensitivity analysis, correlation, and historical data fitting. The sensitivity analysis helps you to understand which of the uncertain input variables are most critical and drive the uncertainty of your cost model. Correlation lets you link uncertain inputs and account for their positive or negative dependencies. If historical data does exist, the data fitting feature will compare the data to the distribution algorithms and calculate the best possible fit and parameters for your data.

LEARN MORE ABOUT CRYSTAL BALL FOR COST ESTIMATION

This page offers links to a growing number of resources, including recorded Web seminars, articles, white papers, case studies, and example models. Additionally, you can view a list of common uses and examples reported directly from customers using Crystal Ball. You can also download a free trial version of Crystal Ball to see how it can help improve your business forecasts and decisions!

RECORDED WEB SEMINARS

Cost and Risk Modelling - The Challenging Business Driver Organisations today are increasingly challenged with cost and risk modelling. The seminar will provide case study examples and discuss the major issues in industry both from customer and supplier perspectives. Presented by Professor Rajkumar Roy with Cost Engineering research at Cranfield University Recorded July 5, 2007	View recording Download files
Cost Estimating: "The Known Unknown" Purchasing of materials in the chemical, plastic and fibre industries requires detailed cost estimation. This seminar presents a case study, where the economics of a multi-step chemical process were modelled. Presented by Dr. Robin MacDonald, Managing Director, PCI Nylon Recorded April 5, 2007	View recording Download files
Scenario-Based Risk Analysis Using 2-D Simulation Learn how stochastic simulation tools can be used to perform scenario-based risk analysis using two-dimensional simulation techniques to account for, and separate out, both cost estimating risks, and risks that are dependent on particular programmatic, design and manufacturing scenarios. Presented by Raymond Covert, Technical Director at MCR, LLC Recorded October 24, 2006	View recording Download files
Simulation and Optimization as Effective Cost Estimation Tools Simulation and optimization techniques can provide cost estimating and analysis professionals increased accuracy of estimates and simplified cost and schedule risk analysis, by modeling the probabilistic behavior of the cost estimate. Presented by Crystal Campbell,Sr. Product Consultant with Crystal Ball Recorded September 14, 2006	View recording Download files
Cash Flow at Risk – Electronic Chip Production Profitable production of electronic circuitry runs the gauntlet of unique technical and marketplace hurdles, all of which involve risk and cost. Many of these costs require stochastic models, because single point analysis fails to value various aspects of cash flow at risk. Presented by Alan Gorlick, financial consultant and University of Phoenix faculty member Recorded September 25, 2007	View recording Download files
Improve Business Value from Time and Cost Estimates: How BP uses Monte Carlo Analysis as a Risk Management Tool Learn how a major oil and gas company has made Monte Carlo analysis a core skill of the thousand-strong well engineering staff at the world's largest privately-owned oil and gas operator. Presented by Hugh Williamson, BP's global specialist on well cost estimation and risk management Recorded May 24, 2006	View recording Download files
Cost Optimization of Space Systems Learn how stochastic simulation tools can be used to solve the problems of optimizing the total cost, affordability and effectiveness of a replacement space system. Presented by Raymond Covert, Technical Director at MCR, LLC and Karl Luce, Master Black Belt at Decisioneering, Inc. Recorded October 18, 2005	View recording Download files

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WHITE PAPERS AND ARTICLES

Advances in Cost Estimating Relationship (CER) Development:Errors-in-Variables Regression (note: no formal paper is available for this talk, only the conference presentation) Raymond Covert, Technical Director, MCR, LLC	Download
Basic Cost Risk Analysis: Using Crystal Ball on Government Life Cycle Cost Estimates R. Kim Clark, Associate, Booz Allen Hamilton	Download
Basic Techniques for Analyzing and Presentation of Cost Risk Analysis By Randy Lorance & Robert Wendling	Download
Benefits and Costs of Using Probabilistic Techniques in Human Health Risk Assessments -- With an Emphasis on Site-Specific Risk Assessments By David Burmaster (on the Alceon Corporation Web site)	Download
Comparing Crystal Ball with ACEIT By Alfred Smith, Shu-Ping Hu, Tecolote Research Inc.	Download
Integrated Cost / Schedule Risk Analysis By David Hulett (PowerPoint presentation)	Download
Introducción a la estimación de costos referidos a daños ocasionados por desastres naturales y costos de obras de mitigación por medios del uso de técnicas de simulación By Edgardo Alberto Masciarelli, Pablo Arranz, and Marcelo Esteban Zeballos (This is a Spanish-language paper: Introduction to the estimation of costs referred to damages caused by natural disasters and work costs of mitigation by means of the use of techniques of simulation)	Download
Modeling the Cost of Load and Wasteload Allocations By Chris Miller (section on EPA site with case study and optimization model for Crystal Ball)	Download
Process Operating Costs with Applications in Mine Planning and Risk Analysis By Doug Halbe and T.J. Smolik (Presented at the SME Mineral Processing 2002 Symposium)	Download
Project Cost Risk Analysis Using Crystal Ball By David Hulett	Download

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CASE STUDIES

Projecting Unit Cost Figures 3M Company's Use of Crystal Ball Improves Unit Cost Estimates	Download
Lifecycle Cost and Benefit Analysis Use of Crystal Ball Pro Provides TRW With Increased Flexibility and Efficiency	Download

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EXAMPLE MODELS

Cost Estimation Model Detail: This model is a simplified cost estimating tool for a project manager to understand the cost risks for a project.	Download For: Crystal Ball Level: Simple
Groundwater Cleanup Costs Detail: Your remediation company wants to bid on a project. The costs for the different cleanup methods vary according to the resources and time required for each (cleanup efficiency). With historical and site-specific data available, you want to find the best process and efficiency level that minimizes cost and still meets the study's recommended standards with a 95% certainty. Includes optimizations setting file and uses a decision variable to select different sets of assumptions.	Download For: Crystal Ball & OptQuest Level: Simple
Hardware Cost Estimation for Aerospace Project From: Ralph Geiger, Operational Concept Analyst, The Boeing Company Detail: This engineering cost assessment model uses a competitive price estimate risk analysis for an avionics upgrade. The systems engineers have developed a preliminary design configuration that includes estimates for hardware, software, and systems engineering. The model uses cell referencing and a correlation matrix.	Download For: Crystal Ball Level: Simple- Moderate
Project Cost Example Detail: At the click of a button, this simple VBA example defines distributions around a list of variables, defines a forecast, runs a simulation, and exports a forecast chart to the worksheet. You can add as many project elements as you like, and the VBA code is provided on a second worksheet within the model.	Download For: Crystal Ball & Dev. Kit Level: Simple

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COMMON USES & EXAMPLES

• Assist clients with risk analysis of complex capital projects - costs and schedules
• Cost estimation for chemical consumption with associated risks
• Cost risk assessment
• Develop ranges of costs for cost estimating
• Estimating income and costs for operating the College of Engineering and for educating students
• Evaluation of range of costs for environmental remediation projects
• Identifying risk in drilling cost estimation
• Prediction of various plant costs with uncertain levels of data accuracy
• Project Management Facility Maintenance Data Controller
• Risk analysis of cost estimates
• Risk/Cost analysis and probability to decide on appropriate money allowance for risk to be added to an estimate of a construction project cost
• Software development project cost forecasting
• Validate estimation cost and schedule
  

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