Cost Modeling

Cost modeling is one of the most common business activities in an organization. It occurs in company areas such as:

• Product development: Estimating the life cycle costs for next-generation products;
• Project management: Predicting the risks of budget overruns;
• Operations: Calculating the costs of manufacturing processes, distribution plans, and inventory policies;
• Marketing and Sales: Studying the cost-effectiveness of promotional and customer retention campaigns;
• Finance: Analyzing the Profit & Loss (P&L) and Balance Sheet implications of capital expenditures;
• Etc.

The Vanguard System™ is a comprehensive business solution for improving the quality, reliability, and speed of cost modeling activities throughout your entire organization.

Complex Models Made Easy

Vanguard's hierarchical tree interface makes it easy to apply the Divide and Conquer concept to cost modeling. That is, to build a complex cost model you simply divide it into two or more simpler component models. To build these component models, you apply the same process again, breaking them down into still finer elements. The result is a Vanguard tree.

Unlike spreadsheets, Vanguard automatically constructs a visual diagram that matches the logical structure of your model. This is a key benefit that makes it easier for you to tackle complex, and sometimes ill-structured, cost models.

Vanguard's tree structure not only provides a great way to build cost models, it also provides at-a-glance understanding for those who are unfamiliar with your model. Anyone can quickly navigate your model and drill-down to review assumptions, gain insight into your results, and provide feedback.

Real-time Collaboration

The knowledge your business needs to build comprehensive cost models is divided between individuals who are spread throughout your organization. Vanguard frees you from having to rely on the pieced-together analysis of a single modeler with second-hand costing knowledge. Instead, Vanguard directly involves key individuals in a collaborative modeling process to create a collective intelligence that is unachievable any other way. Vanguard captures this collective intelligence as component models in a reusable knowledge-base, or model library, that grows through continued use.

What's more, Vanguard automatically handles the intricate complexities of combining component models when they are built by people in different countries using different currencies, different time scales, and different update schedules.

With Vanguard, models are continually refined as new information is gained. The result is Living models that reflect the collective understanding of your project group as it exists now.

Capturing Uncertainty, Understanding Risk

Traditional costing methods only calculate a single point-estimate for cost. For this estimate to be accurate, every aspect of your product, project, system, etc., must be known with 100% certainty. But what happens when the product design or project scope changes in the future? Or, what about when production volume ranges from 50,000 to 150,000 units? When you face uncertainty of any kind, you must employ Quantitative Risk Analysis techniques to capture the uncertainty and understand your cost risk.

Vanguard lets you replace point estimates for any parameter with fuzzy values and conditional branches that reflect your uncertainty. This helps you assess the full range and likelihood of potential outcomes. Even when historical data is scarce, Vanguard knows how to interpret your management estimates, assumptions, and uncertainties.

Vanguard simulates thousands of scenarios at the same time and identifies your most important cost risks and opportunities. You can try your own what-if scenarios or let Vanguard show you where to focus your attention, how to optimize your resources, and which risk mitigation strategies to prepare.

Benefits / Features

• Collaboration: Many individuals simultaneously contribute to a modeling effort. Like building blocks, easily combine their knowledge, assumptions, and historical data into complete models.
• Reusable model library: You do not have to re-invent the wheel with each new costing effort. Simply search your model library to find similar or related models that you can update, specialize, or link to in real time.
• Roll up / Drill down: Roll-up your analysis to see high-level views, or drill down into specific areas of the model for greater detail and understanding.
• Instant Web reports: With a few clicks, Vanguard turns models into interactive Web reports. Access your models anytime from anywhere, fully exercise the models in real time, and distribute your results to everyone who needs them.
• Easy integration: Vanguard integrates directly with your existing business systems such as databases, enterprise applications, and even spreadsheets.
• More...