There seems to still be confusion about what the Cone of Uncertainty means for some in the #NoEstimates community. I work in a domain where the CoU is baked into the Integrated Program Performance Management (IPPM) processes flowed down from the buyer, in this case, the Federal Government.
The CoU paradigm defines the needed reduction in uncertainty is some performance metric. This can be the confidence in the estimate for any variable. It can be the needed performance of a measure - Effectiveness, Performance, Key Performance Parameter, or a Technical Performance Measures. Here's a summary of these elements.
The specifics of the Technical Performance Measures applied to inform Physical Percent Complete and the Cone of Uncertainty around the TPM are shown here. Page 22 is an example of a cone that needs to be adhered to for the program to stay on schedule and cost.
There is NO data needed to use the CoU. The CoU is a build-to paradigm, where measures of the program's performance cumulative to date is used to inform the risk for future performance. IN this case Mean Time To Failure. But is can be ANY variance for the program, including confidence in the estimates of future performance - cost, schedule, or technical performance.
Understanding the Cone Uncertainty, shown in the figure above, helps to appreciate commitments in this context of change. Early in a systems lifecycle, there are many possible system capabilities and solution to consider., leading to a wide range of system costs. Particularly in competitive procurements, it is tempting to make bids and proposals as the lower edge of the Cone of Uncertainty. This is often rationalized through optimistic assumptions such as "The A team will perform on the project." "The COTS products will do everything right," or "it shouldn't take that much effort to turn the prototypes into products," Often, such temptations are mirrored with similar behavior by acquires who are trying to sell their programs, resulting in a "conspiracy of optimism." This usually results in a project's actual costs far outrunning the optimistic estimates and creating a large overrun.
- "Sizing Challenges," Victor Fuster & Taylor Putnam-Majarian, Software and IT-CASR Proceedings, 22-24 August 2017
- "Uncertainty in through-life costing-review and perspectives," Goh, Yee M., Newnes, Linda B., Mileham, Antony R., McMahon, Chris, Saravi, Mohammad E., IEEE Transactions on Engineering Management, 57 (4), pp. 689-701
- "Application of Real Options Theory to Software Engineering for Strategic Decision making in Software Related Capital Investments," Albert O. Olagbemiro, Naval Postgraduate School Dissertation, December 2008.
- "Software Projects Estimation & Control: Versatility & Contributions of COSMIC Function Points," Alain Abran, ICEAA 2017 ProfessionaDevelopme t& Training Workshop, Portland Oregon, June 6-9, 2017.
- "Using NESMA Function Point Analysis in an Agile Context," Roel van Rijswijck, Thesis, Radboud Universiteit Nijmegen
- Incremental Commitment Spiral Model: Principles and Practices for Successful Systems and Software, Barry Boehm and Jo Ann Lane, Addison Wesley, 2014 - Instead of quoting a 1981 book, read this book for the current processes for using the CoU and the Incremental Commitment approach.
- "Future Challenges and Rewards for Software Engineers," Barry Boehm, Data & Analysis Center for Software (DACS), STN 10-3, October 2007, Volume 10, Number 3
There are 100's more papers and books on Cone of Uncertainty or containing the CoU concept that Google will find for you.
So here's the get off the stage message
The Cone of Uncertainty is a program performance management paradigm, where the outline of the cone - reducing the variance of some program variable - as the project progresses. When the measurement of the variable is NOT inside the cone, then this is a call to take preventative or corrective action to get back inside the cone. Past data is NOT needed to show the CoU is Value. The COU is a build to paradigm. The needed data comes from the executing program. This has been stated numerous times but attempts to redefine the COU still persist.