Estimates are never 100% accurate, by definition, so tracking confidence your estimates is important. Confidence is managed in several ways:

1. As computed by the system for each estimating record based on source data behind each estimate,
2. As computed by the system for each WBS based on aggregated or weighted estimate confidence in that WBS,
3. As input by the user for each WBS based on a 'star rating'.

Confidence not the same as managing project risks and computing risk-adjusted cost, nor is it the same as managing three-point estimates (best case, worst case and most likely effort).

Labor estimates are assigned a confidence % score based on the estimating method selected, as highlighted in the screen-shot below, as follows:

• 35% for Engineering estimate - level of effort
• 45% for Engineering estimate - discrete plan
• 55% for Engineering estimate - from Primavera
• 55% for refering to prior estimate (copy plan)
• 75% for a parametric estimate
• 80% for make part routing standards
• 85% for manually adjusted routing standards
• 85% for performance history (copy actuals)

You can modify these percentage scores with your implementation consultant during the system configuration and deployment phase.

The system calculated confidence is available to view as a column in your labor estimate. It is shown in the screen image below.

In-house manufactured parts are costed based on routing standards and assigned a confidence score of 80% (or 85% if manually adjusted) as explained above.

Purchased parts are costed based on purchase order history and vendor quotations and are assigned a confidence scope based on the accuracy of the source document such as the historical purchase order used. "Accuracy" is a combination of how recent the historical source document is, and how close the historical order quantity is to the new estimating quantity. A recent purchase order for approximately the same quantity as needed for the new proposal is assigned a high confidence score, as compared to an old purchase order for a very different quantity where inflation and quantity price-breaks could impact the unit cost significantly.

The confidence score for a historical purchase order is technically calculated as a confidence % based on the purchase order age multiplied by a confidence % based on the quantity variance, i.e. the absolute value of the purchase order quantity minus estimating quantity divided by the estimating quantity.

The table on the left indicates the confidence based on purchase order age, while the table on the right the confidence based on quantity variance. For example a 2 year old purchase order for 100 pieces would be assigned a confidence score of 80% x 30% = 24% if the estimating lot-size was 500 pieces (the variance being 400 pieces or 4x the estimating quantity).

The confidence scores and ratings or age and quantity variance bands can be modified by your implementation consultant.

Confidence scores are not currently calculated for travel and other direct cost estimates.

The confidence score for a proposal WBS is calculated based on the weighted average of the confidence scores for the labor and material estimating records assigned to that WBS. In other words the confidence score for a WBS is the sum of the confidence times cost for each estimating record, divided by the total cost of the estimating records in that WBS.

Unlike labor and material estimating record confidence, the confidence score on a WBS element can be manually adjusted as shown in the screen image below. Click on the star in positions 1 through 5 to set the WBS task confidence to 0-20, 20-40, 40-60, 60-80 or 80-100% respectively. While the confidence score as a % on the WBS is always calculated automatically, the confidence score as a 'star rating' is only set by the system if not manually set by a user.

There is only one star rating to denote the confidence rating of each WBS, so that if someone changes someone else's rating it is simply over-written. When using the confidence star rating your company should put in place policies about who can change it.