Tools and Techniques of Estimating - Free

s e u q i hn c e T g ct n i e t j a ro m P i es t i r s E Se

s l l i Sk

Simon Harris, PMP, CGEIT, IPMA-D, P2

Logical Model Ltd ©2010

Slip: Being first at the bar Float: Remaining Beer kitty Milestone: Paul buys a round Elements will be phased in Good, gradually as but…perhaps a the software little more matures: detail here ? It's late!

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Results are promising : Turned power on and no smoke detected -- this time...

Essentially complete: It's half done. We predict... : We hope to God! Serious but not insurmountable problems. : It'll take a miracle... Basic agreement has been reached. : The @##$%%'s won't even talk to us.

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to ity ot en ser ann h e s I c ge t o t et g a t m hi n ou r nn o c a e et an Gr pt th The gs I c o hid ll . t e e ki in acc hang he th dom d to y c et wis ha n m n g th e se I o t o b e ch a a n d f t h o e y g e t o a s o th lp m day y t, ep ies se a o e acc bod ecau so, h on t et I m w. b al ep e fe orro m t he t y d s a tod s. An oes I to th s tom en I' at ed kis Wh th rve e t ne f th nect e to er... ems kes n lo v a e ha emb it s t it t 4 to e fu b e co ha ca r ly em , & t y r h! y n a to d a u p, n d o m out . . ym a m e a d me e rk. t he elp lly b ind mile in th t wo on s w a d h ea e An g a r g to 28 to eon 00% y 40% ays. 1 om rid n, yin da vin ha re tr frow ack s give Tues on F a to sm ays on 5% le w l o les op pe usc arm t to a 23% rsday e m y y u 42 m l p m n d a Th d H e n Mo % o n en o 2O e xt % 12 s day e dn We

In the beginning was THE PLAN. And then came The Assumptions. And The Plan was without substance. And The Assumptions were without form. And darkness was upon the face of the Workers. And they spoke among themselves, saying, 'It is a crock of s--t, it stinks.' And the workers went unto their Supervisors, and said, 'It is a pail of dung, and none may abide the odour thereof.' And the Supervisors went unto their Managers, saying 'It is a container of excrement, and it is very strong, such that none may abide it.' And the Managers went unto their Directors, saying, 'It is a vessel of fertiliser, and none may abide its strength.' And the Directors spoke among themselves saying one to another, 'It contains that which aids plant growth, and it is very strong.' And the Directors went to the Vice-Presidents, saying unto them, 'It promotes growth, and it is very powerful.' And the Vice-Presidents went to the President, saying unto him, 'This new plan will actively promote the growth and vigour of the company, with powerful effects.' And the President looked upon The Plan, and saw that it was good. And The Plan became policy. And that is how S--t happens.

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This is a complete training course in our project skills series! And for FREE if used for personal, individual development!! – No catches everything needed is within this file

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If you want to use this intellectual property as a commercial offering that’s fine too as long as you cut me in  I don’t want much !! – Pre-arranged commercial use removes this notice, gives you animated slides that build procedures step-by-step, also step-by-step exercise files, instructor notes, suggested time-line for delivery and support –

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For non pre-arranged commercial use (IE where you charge a fee) I hereby offer you a contract to use this materials, without prior notice in a commercial context at £1,000 per day or per copy which ever is the greater (that’s an ‘offer’ and notice of ‘consideration’, use will constitute ‘acceptance’ and forms contract) – as soon as I become aware of use I will start proceedings to collect fees due If in doubt – Ask 

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Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Estimating Manager’s 2-Day Course Simon Harris, PMP

(c) Logical Model Ltd 2007 [email protected]

3

Poor Estimates Are Everyone’s Problem


• Why is my poor estimate ‘your problem’?

4 (c) Logical Model Ltd 2007 [email protected]

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Some pages numbers are omitted – it isn’t an error it’s my means to insert pages later without renumbering everything afterwards


5

Cheese Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• I had to do something to earn my current Cheese • Having Cheese makes me happy • The more important that my Cheese is to me the more I want to hold on to it • Change happens: the faceless “they” will (re)move your old Cheese • Noticing small changes in my Cheese helps me anticipate change in advance & adapt to big changes when they arrive • Smell the Cheese often to check for small changes • The world changes, my Cheese is moved: If I do not change I will become extinct • I did things last week. I had Cheese last week. If I do things differently next week I may not have Cheese • Thinking about not having Cheese makes me afraid • Being afraid stops me doing things differently • I have to ask myself “What would I do if I were not afraid” • When I stop feeling afraid I start feeling good • Imagining myself enjoying New Cheese is the first step leading me to it Inspired by “Who Moved My Cheese” by Dr Spenser Johnson an excellent 45 minute read (c) Logical Model Ltd 2007 [email protected]

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Cheese Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• • • • •

Movement in a new direction helps me find New Cheese The sooner I let go of stale old Cheese the sooner I find New Cheese It is safer to search for New Cheese than remain in a Cheese-less state Old beliefs do not lead to New Cheese Beliefs only change when we believe that there is New Cheese to be discovered and enjoyed

• The new ideas in this or any course need conscious effort to be understood – Worse!, it takes much more effort to put them into use • Examine your Old Cheese for mould ((problems with current working) • Imagine your self enjoying your New Cheese (benefits of new practices)

– Consider the steps to move from one comfort zone to a new one • Who needs to be involved, What actions, When & What is in it for them

– Share your insights & FUD (fear uncertainty and doubt) in class • Discussing implementation challenges helps you prepare for action • Gives comfort knowing others have been & are succeeding (and helps networking)

• Promise yourself 1 action now, with a date. On your return to the office plan7 your intended achievements with a milestone each Friday till done



Lesson 0: Introductions & Logistics


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Who Are We All? Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Name, Role and Organisation: Telling others about yourself – Something about your current cheese


Exercise: Introductions


Please appoint a scribe & produce 2 flips charts, firstly…. • 1m each: Would 1 person record the details of each individual – – – –

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Their name, role at work and years of relevant experience Shoe size, favourite colour and birth-day & month An adjective that describes how you feel about being here When everyone is done then stick First Flip-Chart-Page to the wall using blu-tac

5m: Secondly a group-wide Flip-Chart-Page capturing… – As a group discuss “What I want from this course to be of value to me is…” – Record conclusions of the discussion on the second flip, either as a single consensus view, or multiple individual needs or any mixture of the two – Transfer to the wall using Blu-tac

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3m: Thirdly a Flip-Chart-Page capturing… – Please discuss and record what ground rules should you and I agree to for the course this week that will maximise your chance of achieving your goal 10


Debrief: Introductions


• •

What were the steps in the exercise Which ones gave you any:– Discovery discourse and disclosure,? Any discomfort, disconnection, dislocation (confusion) ?

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What have you learnt or are you learning? What variations might there be around… – Context in which we use the new skill at work from classroom – Process changes to account for different needs – Outcomes required or achieved (intended or not!)

• •

How does what we have covered relate to your problems & needs What actions and steps will you take to make use – Over what timescales & with whose involvement


Course Objectives: To Be Able To:…


• … Create a working environment in which results achieved are matched to expectations – Nothing ever matches the estimate without monitoring & control in the execution phase

• … Manage those producing & working to estimates • … Assess & express balanced terms in the equations:… – Work determines resource determines cost and duration – Resource divided by duration determines work and cost – Or any other mix of the constrained, controlled & consequential

• … Apply skills in sizing cost, time, resource, risk and uncertainty at varying levels of confidence – Estimate probabilistically 12 (c) Logical Model Ltd 2007 [email protected]

Route Map To The Objectives


SoD Coffee

9:00

Lunch Tea

10:30 12:30

15:00

EOD-1

Coffee

Lunch Tea

EOD-2

10:30 12:30


Path To Success Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Day 1

Estimating Introductions & Logistics What is an Estimate, Ranges and Planning reality Planning Concepts Estimating Approaches & Techniques Progress Tracking & Feedback loops

Things to count & advanced parametric models Non-numeric Estimates Experts & Overcoming the Problems With Them Estimating for Situations with Less Than Certainty Adding & Showing Uncertainties

End (c) Logical Model Ltd 2007 [email protected]

Day 2 14


• •

Projects run successfully when they use controls effectively Our controls include your feedback – I try hard not to offend, bamboozle or bore you. If you have feedback at any time please advise me in what ever way is comfortable for you so I can act • EG: Comment, in person in class/ at a break/ at the end of day or • Add a note to one of the Ground-Rules flip-charts or • Blu-tac a note or stick a Post-it to the back of the training room door

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While comments on the end of event form are always welcomed and acted upon they are too late to make the event better for you – If I don’t know its unlikely I will fix it, If I do know I can at least try – Eg Course pace, topic depth, time given each topic, heating/ lighting, Exercises & debrief, Anecdotes & jokes, Catering or parking, Course notes and pens, etc etc etc without limit

• • • •

Chapter Notes & Actions to Implement (c) Logical Model Ltd 2007 [email protected]

15


Lesson 1: What is an Estimate?


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Estimates Are Not Guesses Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What is the difference between a guess and an estimate? • What are the components of an estimate? • People rely on estimates – Short-term: pride in a good job well done – Long-term: keep your job – Final analysis: return value to the shareholders

• An estimate is defensible at all times – Open to re-estimation when basis of defence changes

•The

greatest of all gifts is the power to estimate things at their true worth Frabcois de la Rochefoucauld 1613-1680 (c) Logical Model Ltd 2007 [email protected]

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Content Of An Estimate ? Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Scale • Basis of quantification – Perhaps including sensitivity to factors in basis

• Assumptions – Factors used in derivation that are less than 100% reliability

• Markers on the scale for optimistic & pessimistic assessment – A range: may be accompanied by a Confidence Level

•There

is no such thing as absolute worth. You can only estimate what a thing is worth to you – Charles Warner 1829-1900 (c) Logical Model Ltd 2007 [email protected]

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Use of Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Who needs estimates ? • For what purposes do we need estimates ? – In order to quantify project factors and product characteristics • Critical Success Factors

– But only in support of decision making! • Basis of our plans & co-ordination of activity with others • Targets for our processes and products

• Assessing viability, rationing resources & coordination • What qualities make an estimate “good” (or bad) ? 20 (c) Logical Model Ltd 2007 [email protected]

Accuracy v. Precision Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What is accuracy? – Truth, relationship between assertion & facts

• Inaccurate estimate are useless – Agreed? – How can we insure accuracy? • What is precision? – Real world estimates must use a range & confidence level


Achieving Accuracy Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Estimates are uncertain – Educate stakeholders to understand range & confidence – Educate stakeholders to understand continuous elaboration

• Promises (IE certainty) WILL include a premium for risk – Someone must make visible provision for uncertainty somewhere in the project’s baselines • Hidden contingency cannot be managed and is habitually wasted • Make uncertainty explicit and place allowances under control

• Quote & justify the budget, the confidence level, the contingency provision and reserves separately • Establish the process for refining estimates over time – Iterative application of techniques with feedback loops 22 (c) Logical Model Ltd 2007 [email protected]

Early Estimates: Wide Ranges Engineering Reality

Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied Probability

Design/ Contract Requirement/ Heads of Agreement Business Winning’s Reality?

Concept/ RFP, ITT Quality of Scope Definition

Quality of Estimate Width: Height 23


Planning Horizons Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Monitoring points based on planning horizons • Often impossible to plan the whole project in detail due to uncertainty about future work, changing environment and business conditions Starting up a task

Investigation

Creates the overall plan. Complete but detail decreases with time to horizon The horizon is not far off at this point in the project! Detailed Plan

Technical work

Technical work

Technical work

Plan the planning

Short time horizon

Initiation Stage

Run to the detailed plan

Run to detailed plan

Project Plan Detailed Plan Short horizon Refine overall

Detailed Plan Short horizon Refine overall

1st Specialist 2nd Specialist Stage Stage Management Stages

Run to detailed plan

Updated Updated Project Plan Update overall Plan to closure

3rd Stage


Rolling Wave Planning Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

As detailed as is possible with what we know today

Time Now

Planning Horizon Far Term Activities

Planning Packages

Work Actuals packages Near Term Activities Named resources Detailed tasks Final/Definitive Estimates

Generic resources Activities Indicative Estimates

Generic resources Phases ROM Estimates


Rolling Wave Planning After a Stage Boundary


As detailed as is possible with what we know today Time Now

Planning Horizon Work packages

Far Term Activities Planning Packages

Actuals Near Term Activities Named resources Detailed tasks Final/Definitive Estimates

Generic resources Activities Indicative Estimates


Uncertainty Decreases As.. Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Closer in time and / or better understanding (EG after Design or we have prior experience) – Width of range (peak height) matches understanding Near term and well understood task Far term and good understanding Near term and poor understanding Probability

Any Level Estimate

Cost, Time


What Is Different In Each Quadrant? Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Increasing Uncertainty

Unskilled, Inexperienced

Experienced & Skilful Clear Goal • •

What are the characteristics of each quadrant? Risks, Rewards, Controls,… ?

Unknown Goal “Where ever we are going it is ‘away from here’“

Increasing Uncertainty


Project Control Assessment Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Score your current project or programme 0

10

Score

Purpose

Clear

Un-Clear

_____

Goals

Stable

Changing

_____

Resources

Adequate

Scarce

_____

Schedule

Flexible

in-Flexible

_____

Process

Tried & tested

Novel

_____

Technology

Familiar

Unfamiliar

_____

Resources

Dedicated

Shared

_____

Organisation

Project

Functional

_____

Customer

One

Many

_____

Decisions

Swift

Slow

_____

Decision making

In Team

Out with Team

_____

Team

Collocated

Distributed

_____

Project SH*T Factor

______

•The

least used and most valuable phrase is “I don’t know” •(c)The most important subsidiary phrase is “…I’m currently researching it” Logical Model Ltd 2007 [email protected]

29

Exercise Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Exercise users guide 1. Appoint a Project Manager (Birthday nearest to today), Scribe next nearest B’day & a Reporter (3rd nearest) •

•

Exercises are designed to make you examine your current working practices. You should feel some dislocation, discomfort and discovery during them –

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PM’s job to deliver on time! Reporters job to tell us the results – be ready to tell us more than just what is on the flip-charts

It is OK (expected even!) to be confused during an exercise BUT NOT OK to still be confused AFTER the debrief!

During the Debriefs we will always explore any confusion, all questions & any loose-ends that you raise in exercises 30


Status Quo Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Step: 3 minutes – Brainstorm to a flip-chart a list of “Improvements that we want to achieve in our estimating performance…” Step: 5m – Record to a 2nd flip-chart the group’s brainstorm under the title “Everything we currently know, or know we don’t know about estimating” – Record topics you know of within estimating, eg techniques you’ve heard of (whether used or not), different approaches, skills & other relevant items that you can think of

Step: For those finishing swiftly - Mark any techniques identified for how much use you make of them (Eg always, only if relevant, rarely, never) plus how effective they are 31 (c) Logical Model Ltd 2007 [email protected]

Debrief ? Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How did the group perform? – Purpose of the step timings?

• Did you make any discoveries ? Feel any discomfort? Are you left with any dissatisfaction? – They are often linked – “out of our comfort zone” – No gain without pain – chance for some gain may evoke feelings of discomfort – Are current problems within current knowledge & practices?

• What have you learnt about – Trouble creating estimates (before the estimate) – And …. After the estimate is provided

• Relevance, Application & Adaptation 32 (c) Logical Model Ltd 2007 [email protected]


•

The new ideas in this course (or any learning situation) need conscious effort to be understood – It takes much more effort to put them into use • Examine your Old Cheese for mould (problems with current working) • Imagine your self enjoying your New Cheese (benefits of new practices)

– Consider the steps to move from one comfort zone to a new one • Who needs to be involved & what is in it for them • What actions, by whom & when

– Share your insights & FUD (fear uncertainty and doubt) with the class • Discussing implementation challenges helps you prepare for action • Gives comfort knowing others have and are succeeding (& Helps networking)

•

Promise yourself one action now, with a date. On return to the office plan weekly achievements with a milestone each Friday till done

•


33


Lesson 2: Planning Concepts Context for the generation of estimates


34

Context for Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Estimates are used to create plans that realistically reflect work to be done – Estimates are only meaningful when you know the process that will be applied to achieve the result • Iterative step: process estimate reassess process

– Plan is a process map

• How are plans created? – Review of the steps in planning

• Consideration of usage comes later when we look at feedback loops 35 (c) Logical Model Ltd 2007 [email protected]

Development and Maintenance of Project Baseline


Needs Needs or or Objectives Objectives Strategic Strategic Risk Risk

Scope Estimating

Deliverables Deliverables Bill Bill of of Materials Materials && Quality Quality Description Description

Schedule Estimating

Task Task List List (WBS) (WBS) & & Work Work Assignments Assignments (OBS) (OBS) Dependencies Dependencies

Schedule Schedule Baseline Baseline

Monitoring, Monitoring, Tracking Tracking & & Control Control (c) Logical Model Ltd 2007 [email protected]

Resourcing Resourcing

Scope Scope&&Responsibility Responsibility Baseline Baseline Response Responseto to Tactical Risk Tactical Risk Finalised Finalised Cost/ Time/ Cost/ Time/ Scope Scope baselines baselines

Cost & Resource Estimating Cost CostBaseline Baseline

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Scope: Project, Phase & Work-Package


Project

Deliverables (Products)

Need

Work-Packages

•

Phase Boundaries

Satisfied need

Customer’s (& possibly the Boss’) view of scope is – – – –

All the deliverables (NOUNS) All final deliverables (eg services and physical items) All intermediate deliverables (eg tasking orders, design drawings) All management deliverables (eg progress reports) & quality activity 37


ALL the Products = ALL the Tasks Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Crucial first step – Identify all results: deliverable and project’s internal deliverables

• Include temporary or throw-away deliverables – Prototypes, mock-ups, test-rigs, stubs & drivers, scaffolding & jigs

• Include management and quality products – Risk and issue reviews, assumption analysis, communications plans, resource acquisition – Progress reports, lessons learned & problem diagnosis

• Work (i.e. Tasks) derived from product specifications – Include specification of the Grade or Quality required 38 (c) Logical Model Ltd 2007 [email protected]

ALL the Tasks = ALL the Effort Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Every product (noun) has a lifecycle of tasks (verbs) to create it • Include all tasks to “do the work” – Include all tasks: raw work plus defect creation & defect prevention

• Include all tasks to “check the work is OK” – Include all tasks for defect detection

• Include all tasks to “report the status” • Include all tasks to “rework defects & errors” – Include all tasks for defect and error resolution & retest – Include all tasks for repair to reputation & relationships


Work Breakdown Structure Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Project

Product

Need

(satisfied need)

Definition Definitionof ofall allthe the work in the project work in the project

BS Quality Functional

NonFunctional

Specialist Process Standards

Product Standards

Management Ditto

Hierarchy Hierarchy down down to to level level needed needed for for planning planning and and control control 40 (c) Logical Model Ltd 2007 [email protected]

Measuring And Estimation Of Quality Attributes


• Functional specification is common and relatively easy – Text, diagrams and specification languages

• Good quality specification is rarer & more important for determining cost & schedule – – – –

Scale & tests to measure Best required & worst acceptable Current & target value (& achievement date) Best possible (State of the Art)

• Convergence of Scope & Quality – Captured in the WBS dictionary


Example: I Want A Fast Car Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How much should we budget & schedule for this project ? • Detailed Requirements: “Boy racer” impressing his friends on the street – Scale: – Test: – – – –

Worst Acceptable: Target Best Required State of the Art

Acceleration Time taken to achieve 60 mph from standing start 8 seconds 5 seconds 4 seconds 3.6 seconds


Example: I Want A Fast Car Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How much should we budget & schedule for this project ? • Detailed Requirements: Attempt on World record for wheeled vehicle – Scale: – Test: – – – –

Worst Acceptable Target Best Required State of the Art

Miles per hour Maximum average speed achievable over measured mile 760 mph 800 mph 800 mph 750 mph


Quality Description WBS Dictionary


• Provides detail of what is to be produced by the work-packages – WBS dictionary is progressively completed and refined as more is established during planning & execution

• Contents – Description: Establish common understanding – Link to all process standards to be applied during execution – Criteria to be used for product acceptance Scope verification dimension of the work-package – Control details Eg. • Estimates for all aspects of the work-package: dates, costs etc • Cost-codes for correct booking of work & materials to accounts and for reestimating, refining and creation of estimating books


Tasks in PDM/ Network Diagrams Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Project Project

Deliverable Deliverable11 AA

BB

CC

II

Deliverable Deliverable22 LL

DD

EE

FF

Deliverable Deliverable33 JJ

GG

HH

KK

• Only tasks at lowest level of WBS are used in network dependency model • Estimated effort divided by resource = duration • Duration plus dependencies = Schedule


WBS + Resources & Schedule = Cumulative Cost & BAC


cost, l l a l l i w t i w what o n k e w y l l hat the Fina w : e l a c s e tim over what ks like. o o l w o l f h s negative ca o be s l a t s u m w ash-flo c e v i t i s can o e p s a C The s s e n i the Bus o s d e l PVs l e N d d n mo a s F C ingful D n a e m n i a t con



Lesson 3: Estimating Approaches and Techniques Context for the use of estimates


47

Approaches and Techniques Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Always use a combination to cross-validate 1 with another • Approach estimating either top down or bottom up – Cross-check one with the other

• Generate the values using analogous and parametric techniques – Answers may be quick but rough or higher precision later

• Gather data from all sources and pass to experts and verify with peer-groups – Qualify assumptions and detect biases

• Always generate three point estimates – Optimistic, Pessimistic & Most frequently occurring – Calculate budget and confidence levels 48 (c) Logical Model Ltd 2007 [email protected]

Estimating Approaches Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Top-down v. bottom-up • Top-down: If it is £1m then…looks like 300k for B, OK? • Bottom-up: Looks like B is … plus … plus… £1m Project

£400k Deliverable A

Component A.1 Component A.2 Component A.3

£200k

Deliverable B Component B.1

Deliverable C

£110k

Component B.2

£125k

Component B.3

£75k

Component C.1

£100k Deliverable D Component D.1

ur e

t re StrruucctuD.2 nComponent

oowwn St d k a e d rreak oorrkkBBC.3 Component D.3 Component W W

Component C.2


Top Down Versus Bottom Up Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Strengths and weaknesses with both • Top-down – Produced early – Often created by analogy with previous efforts • Aided by estimating histories (Documented details of “last time”)

– Lacks precision, based on little concrete detail – Cheap, quick, simple, simplistic,

• Bottom-up: Increased precision – – – –

Not available early in project More expensive and time-consuming to create Capable of greater precision Project uncertainty based on uncertainty described per task 50


Estimating Techniques Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Analogy – Extrapolation of previously observed results to a new situation – All estimating is analogous (otherwise it would be a guess!) – Identify similarities and differences between historical data and current context

• Parametric – An analogous estimate that uses a mathematical formula • Leads to systematic errors – bad news • Easily fixed once detected – hardly good news  • Enabler for continuous improvement in estimating processes 

– Sometimes known as an estimating relationship – Research shows parametric models are more reliable than their creators! 51 (c) Logical Model Ltd 2007 [email protected]

Parametric Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How long does it take to cook a chicken ?

• What assumptions or facts are material to the estimate ?

• How long does it take to analyse a requirement, design a galley, bore a 40mm hole through 20mm plate steel ? •Estimators

are not modest: if its huge they say so. Nor are they shy: if its tiny they say so (c) Logical Model Ltd 2007 [email protected]

52

Analogous Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How long does it take to cook an ostrich ?

• How could we reduce our uncertainty ? • How can we express our uncertainty ?

•Estimators

do it in groups: top down and bottom up - PM Proverbs (c) Logical Model Ltd 2007 [email protected]

53

Exercise: Estimate the following Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

•

Ensure that your estimates are accurate – The weight of the SS Titanic


Debrief Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Now you didn’t get any incorrect did you! • What were your steps to solving them • Suppose you were to do it again (apply now) – What would you repeat or try to do differently next time

• Any déjà vu with daily life • Imagine that you have applied these ideas – What steps did you take and who with? – What did you have to adapt in the idea or the people

• What have you learnt? 55 (c) Logical Model Ltd 2007 [email protected]


Lesson 4: Project Tracking & Feedback Loops


56

Use, Not Creation, Is The Issue Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Estimating troubles are more in the usage than the creation – People create estimates, people use estimates

• Intention and action are not the same – Deadlines drive action • If it wasn’t for the last minute nothing would get done • Nothing gets done until nothing gets done

• Estimating requires multiple feed-back loops – Record initial estimates & regularly contrast actuals & estimates – Review up-coming estimates for same sensitivities – Re-estimate periodically & amend analogies or parametric models

• Must link to tracking, should link to incentivisation – If “3 days” work took 10 days last month then how long do you expect it to take next month? Both links apply! 57 (c) Logical Model Ltd 2007 [email protected]

Improving The Individual’s Estimating Capability


• Allow time for estimating activities – Quickest is only best if 1) accurate & 2) precise enough – Good estimates are an expensive investment – Not EVERYTHING demands BEST estimates, but some things DO

• Establish (non-financial) rewards for good estimates – Recognition – Choice pieces of work – The economy punishes the company for poor estimates • Should there be personal consequences for poor estimating?

• Estimating skills require explanation, coaching, learning – Cascade what you know through the teams


Improving the Organisation’s Ability Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Organisational ability to estimate improves with historic records – Maintain a metrics database

• QMS defines standard work instructions & procedures – Standard tasks = standard durations = standard costs & resources

• Standard BS defines products, phases, responsibilities – – – –

Budget distribution curve has higher & narrower (less variation) Natural basis for creation of metrics database Provides architecture for recording estimates and actuals Standards in the QMS and WBSs in the PMO form the basis of an estimating database

• All adds up to “competitive advantage” 59 (c) Logical Model Ltd 2007 [email protected]

Corporate Development Model Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Decisions Decisionsmade madeon onsound soundbasis basis&& even evenininanticipation anticipationof ofaffects affects across all work areas across all work areas

Probability

Level 2-5

Cost, Time

Estimate

Increasing IncreasingMaturity Maturity

Improved ImprovedPerformance Performance

Estimates Estimatesmatch matchreality reality&& are aretherefore thereforeusable usable

Probability

Level 1 Cost, Time

Plans Plansreflect reflectreality reality

Estimate Reality Realitydoes doesnot not match estimates match estimates

Probability

Level 0 Estimate

Cost, Time

Mismatch Mismatchbetween between plans plans&&reality reality 60


Sources of Misestimating Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

? •

Impact of a 10% increase in work at each boundary? • Minor changes outside of Change Control Plan – – – –

Project Need

1 1 1 6 4 3 36 1

Cascade into major unexpected impacts Design/development delays Parts lists changes Manufacturing plans/methods

1 0 0

1 1 1 2 0 1

Phase Boundaries Satisfied need


Scope Verification Occurs Throughout The Project


Project Need

•

100 90 81

Phase Boundaries

72 63

Satisfied need

54

? If outcome of each of 8 stages is 90% correct, how cumulatively correct is end product? –

What do we need from our internal acceptance process?


Recognising Progress Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• If it isn't finished we’ve made no progress – 0-100 rule: While WIP only the costs are recognised – Task should not span reporting periods

• When you start & end in different periods claim 50% of the credit – 50-50 rule (and variations for 20/ 80 etc)

• % Complete: tasks are objectively measurable – 999 bricks laid out of 1000

• Milestone based percentage complete – “Earnings” are pro-rata but capped until a review is passed – eg Preliminary design review = 15%, Critical design review = 50% Test Readiness review = 60%

• Tasks that are “managerial” can use apportioned effort 63 (c) Logical Model Ltd 2007 [email protected]

Rules for Measuring Performance Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Plot the process in a flowchart (or other plan) – Know what information the data provides

• Define exactly how to collect data for the indicator and how to make the computation • Learn to understand variation – Only management can improve a controlled process – Use the numbers to help people improve, not to judge

• After Gathering….….Analyse – Most important part of estimating, monitoring, correcting • Plan do check act !


EV an Estimating Tool: Project Canine


£k

Month Month55 BCWS: BCWS:£50k £50k ACWP: £60k ACWP: £60k BCWP: BCWP:£40k £40k

170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0

Performance PerformanceIndex: Index:Self-adjusting Self-adjustingParametric Parametricmodel modelfor for estimating project outturn estimating project outturn PI = PI =Plan Plan//Achievement Achievement Prediction = Work_Remaining Prediction = Work_Remaining//PI PI IEAC CPI

EAC (PM’s Estimate) BCWS Curve (PMB)

ACWP curve

VAC

BAC

CV

SV BCWP curve 0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Months


Exercise: EVA Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• •

You have been commissioned to build a stained glass window: You have a helper, you can each complete 10 panes per day. There are 2,000 panes budgeted at £15 each Day 42: panes cleaned and installed 1,100 cost to date is £8,400

•

Calculate EVM, and graph the results. What day is forcast end date? What is FCAC

•

BAC =

•

BCWP =

BCWS =

•

SV = BCWP - BCWS =

CV = BCWP - ACWP =

•

SPI = BCWP / BCWS =

CPI = BCWP / ACWP =

•

EAC = BAC / CPI =

ETC = EAC - ACWP =


EVA Graph of Stained Glass Window Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Day42

30k

20k

SV = SPI = d/

= = = finish day

CV = CPI = EAC =

= = =

BAC = Durtn =

10k

10

20

30

40

50

60

70

80

90

100

110 67



Lesson 5: Things To Count Not everything that counts can be counted Not everything that can be counted, counts. Einstein


68

Base Values Vs. Derived Values Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How big is this room? • To decorate it how much paint & carpeting is needed? • To commission it how much air-conditioning, lighting & furniture is needed? • Which are basic? – Which answers are derived? – Did you have the skills needed to derive all?

• Conclusions?


Basics Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• By trade – Software • Number of use cases/scenario scripts • Weighted Methods per Class (WMC) • Depth in Inheritance Tree (DIT)

Size Size, Complexity Size, Complexity

– Electrician • Phases in the supply • Different types of connected device – Number of devices in each type

• Physical accessibility of cable runs

Complexity Complexity Size

Complexity

• By Phase (E.g…) – Initiation • Number of stakeholders

Political dimension 70


Deriving Schedule… Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Once the basic work required is known… – Insight into how the work will be conducted – Insight into who will do the work – Knowledge of the dependency between tasks

• Duration: Time taken to deliver the effort or work – Duration = ( Work * %Productivity * %Availability ) – Set specific resource availability & productivity at known rates

• Longer term planning requires generic resource assessed at organisational “norms” – May need a multiplier/ divider when adjusting for actual assignment


Units To Estimate In Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• 1st estimate un-derived factors eg raw work (or effort) – – – –

Build a wall 4’6” high * 8’6” long * 2 courses wide, 8” * 4” bricks, Flemish bond Therefore 12 bricks high, 12 bricks long * 2 = 288 bricks Write a 1000 lines of code, Write 450 item Bill of Materials, 25 members of customer staff to interview for requirements, 100 bulk-heads to penetrate

• 2nd translate to duration according to resource allocation – Work / resource = duration. EG 10 bricks per brickie per hour 288 bricks 30 bricks / hour & 2 brickies = 4.8 hours Durtn – 1000 loc / 20 loc/hour * 15 hours/week (ie 50% allocation) = 3.3 weeks – Generic resource at standard delivery rate EG 16dpm 72 (c) Logical Model Ltd 2007 [email protected]

Encapsulate Expert Knowledge Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Models available in different industries – Eg Construction, software, even epidemiology/ disease control! EVM !!

• Factors they formalise must be understood in any estimating activity – Use the concepts to appreciate what matters for producing high-quality estimates – Understand your own cost drivers – Create your own spreadsheets – Spreadsheet always better than a mental model • Audit trail and tracking of results generates huge improvements in estimating capability


Models in a Wide Range of Fields Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied


A Document Metric: Gunning’s Fog index


• Robert Gunning’s Fog Index – Parametric model to estimates the reading age required to comprehend a piece of written English

• Process – Select a sample – Determine the average number of words per sentence – Determine the percentage of hard words (3 or more syllables that are not a) proper names, b) combinations of easy words, or c) made three syllables by suffixes such as -ed, -es, or –ing) – Add the 2 factors and multiply by 0.4

• How does this help a to build a nuclear reactor to time cost & importantly scope? 75 (c) Logical Model Ltd 2007 [email protected]

Complexity Measure for Procedural Software


•

Size measured in Lines of Code – KSLOCs – NCLOC

•

McCabe Cyclomatic Complexity – – – –

•

Thousands of Lines of Code (Non Comment Lines of Code )

CC V(g) = E - N + p E = number of edges of the graph N = number of nodes of the graph p = number of connected components

Cyclomatic Complexity Risk Estimation – – – –

1-10 a simple program, without much risk 11-20 more complex, moderate risk 21-50 complex, high risk program greater than 50 un-testable program (very high risk)


Technical Complexity Assessment Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied


What Quantities Do We Estimate Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Step 1: 1m – Form-up into pairs or threes with those adjacent to you • Step 2: 3m – Brainstorm as many factors as you can that should be / could be estimated in your work-load – Eg Electrical terminations

• Step 3: 5m – Sort the factors into a list of those that are basic to your work and those derived from other factors For the derived suggest the derivations – A starter basic factors could be keel length or task duration – A starter derived items could be miles of cable or task duration – Be sure to DESCRIBE each sufficiently to justify your opinions • Many items could be in either/ both category: explain 78 (c) Logical Model Ltd 2007 [email protected]


•

Visualise the steps you used here – Which ones can your recognise have some parallel at work – Imagine the steps that don’t yet have a parallel • What would they look like in use in work? • How relevant & useful are they? • How easily implemented and accepted by the team, the boss and the customer

– What variations, adaptations, omissions and inclusions might you need to make?

•

Learnings: What to estimate – Any variable of project work or product capability E.G… – Contract Profit, Staff availability, Efficiency, Effort & skills required, Risk impact, probability event horizon, Affect of changes on plans, Assessing recent progress achieved – Cost of ownership, MTBF/MTTR, Speed of operation, Response times Operator errors per 000 operations, … 79



Lesson 6: Non-numeric Estimates


80

Ordinal Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Customer satisfaction – Does 19.6%? 72.8% 82.7% help and is it actually meaningful?

• What is minimum acceptable customer satisfaction level? • Pseudo-numeric estimates may be translated to an ordinal number 1st, 2nd, 3rd etc – Tells us RELATIVE and sequenced data not absolutes – Bob was 1st, Bill 2nd – Could be that Bob ran 3’37.23” Bill ran 3’37.24” or 4days 8hrs 9’ 18.6” or 3yrs… – Each level needs a description to be usable


Exercise : Creating an Impacts-Scale


•

We often have to estimate something ordinal like “Customer Satisfaction”, or “Carpet durability” or “Risk probability” which might use a scale such as VeryHigh, High, Fairly-High, Medium-Plus, etc… • Imagine something you have to estimate that isn’t measured in metres or kilos • Step 1: 3m: Decide on something you need a scale for – Take an ordinal scale and label (say) 1 to 10 – Assign representative statement to the numbers

•

Step 2: 10m Add labels to levels 1 through 10 Example – – – – – –

10… 7 6 3 2 1

Project Cancelled Loss of £100,000 No Perceivable impact 82



• Which steps were easy to assimilate? • What do you feel is most / least comfortable? • déjà vu with daily life – Adjustments to make next time? • What would you vary if doing again? Maybe in a different context?

• Suppose (apply and adapt) – Was it, or when will it be relevant to work? • Easy to take back to work? Hard? Impossible? Irrelevant?

• Learnt – Who will need to do what to achieve application?


Risk Assessment Matrix Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Health & Saftey Environment Reputation Long term Multiple wide-spread Deaths damage Death or Localised Injurys long term Widespread short term Injury

National Outrage Local Outrage

Financial Loss

> 100m >10m

Regulatory Censure >1m Local Media & Customer impact >100k

Time off Short term work localised Easy CleanFirst aid up Complaints

>10k

Qualitative

< 1 in 10,000 Extremely Unlikely

Crisis Catastrophic Medium Crisis Crisis Low

Severe

Low

< 1 in 1,000 Very Unlikely

<1 in 100 <1 in 10

> 1 in 10

Unlikely

Possible

Likely

Crisis High Crisis Medium

Crisis High Crisis High



Moderate High

Unaccep Very High table

Moderate

Low

Low

Moderate High

Low

Very Low

Low

Low

Very High

Moderate High


Higher-Order Drivers for Project Estimates


•

PESTLE – – – – – –

Political Economic Social Technical Legal Environmental



• •

What feedback do you have/ How do you want to provide it? What are your FUDs – The instructor can raise topics as a class discussion if you advise

• • • • • • • • • •

Promise yourself at least 1 more dated action to implement an idea

Your investment here is only worthwhile if you plan & act to grab the benefits


86


Lesson 7: Experts And Overcoming The Problems With Them


87

Expert Opinion: Source Of Data Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

•

Only source of an estimate is prior experience - expertise – Anything else is a guess

• •

Either DIY or you must ask someone else Asking is a fairly easy way to obtain estimates – – – –

Simple to conduct Formal or informal Works with groups or individuals Applies to all estimable quantities

•

Process – – – – –

ID right individuals Prepare by researching Interview to agenda Qualify & quantify data Build a model

• Build workarounds for the pit-falls


Problems With Expert Opinion Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Pitfalls – Experts have biases • Based on what has happened in recent past NOT what is probable

– Some experts are hard work to extract info from • Requires they have the time & inclination

– – – – – –

Hard to assess good v. bad opinion Relies on accurate description of the problem Expert may have difficulty seeing wood for trees Expertise & experience may not translate well to current need Difficult to know how to handle divergent views Requires interviewing (questioning & listening) skills

• How do you test an experts estimate? – Test against another expert’s opinion! It is useful to know when the experts disagree (c) Logical Model Ltd 2007 [email protected]

89

“Gosh is that the time!?...” Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

•

One theory states that

Duration = Work / Resources •

Reality says

Duration * Resources = 90% Work Parkinson’s Law •

After the work is 90% complete then

•

Successful estimating requires psychology

2nd period of equal D * R might = W 90


Psychology Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Student syndrome – When the time is “too long” we waste it at the beginning

• If I say 5 and I take 4? – If I say 5 and take 6? – I’ll say 6 and keep my mouth shut when it is 4

• If you expect to start after me, on Wednesday & I’ve done my bit by COB Monday? • If I don’t ask “are you on schedule?”? 91 (c) Logical Model Ltd 2007 [email protected]

5 + 5 = 13 Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• On the way “up” every piece of work has arbitrary padding added – At the “top” the padding is arbitrarily stripped out – Result: estimates lack reality & transparency

• Why do we do it? – This IS one of *the* problem with estimating

• To prevent both stupidities: Create – Best case & circumstances to achieve it & likelihood – Worst case & circumstances to suffer it & likelihood – Most frequent outcome (most likely) & likelihood – Calculate the “as likely as not (50%)” case 92 (c) Logical Model Ltd 2007 [email protected]

Biases Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Overconfidence – “Piece of cake”, “no problem” – Harder the task more pronounced the overconfidence

• Over prudence – Padding when real or imagined consequences exist

• Confirmations – Look for supporting evidence and ignore contradictory facts – Option stopping: stop looking when “point proved”

• Anchor – The first number you say is the ball-park I’ll stay in


Delphic Oracle: Concept Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• An iterative technique using the skills of many people to converge on the best estimate available – Typically converges in 2 to 3 rounds or shows polarised views – Underlying assumptions exposed

• Allows the PM to assess how fair estimates received are • Variations between estimators will be traceable – To differing views about assumptions – To differing (flawed?) estimating processes – To differing view of the product creation process

• Needs access to experts – Works well via eMail 94 (c) Logical Model Ltd 2007 [email protected]

Delphic Oracle: Process Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Process 1. Supply available information to estimating panel 2. Request each expert estimates separately – Recall that an estimate comprises scale, range, driving factors and known facts, assumptions plus the estimating basis

3. Gather all estimates, collate and circulate 4. Optionally: Participants discuss estimates 5. Each expert amends estimates as they think fit 6. If range within estimates un-acceptable return to step 3 7. Otherwise record estimating range & confidence level 95 (c) Logical Model Ltd 2007 [email protected]

Exercise: Delphic Oracle Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

We need to recruit a Senior Tiddly-winks coach to the after work social club • After discussion the tasks have been identified and are listed below • Individually estimate the duration of step 1 below 1. Draft, agree & place job ad ( Club Chair, Team Captain, HR rep ) Ad to be placed in specialist publication. Copy date 2 weeks after last issue Publishing lead time 4 weeks from receipt 2. (Milestone) Closing date for applications 3. Filter applications for short list ( PM ) 4. Write to invite to interview ( HR rep ) 5. Write to thank failed applications for interest ( HR ) 6. Hold 1st Interviews ( Captain & Chair ) 7. Hold 2nd Interviews ( Captain & HR ) 8. Make Offer ( HR ) 9. (Milestone) Candidate coaches 1st session 96 (c) Logical Model Ltd 2007 [email protected]


• • • • • • •

Learnt Felt Steps Relevance Use Adaptation Imagine using this techniques – How does it feel? – What are the implementation challenges



• • • 1.

What needs recapping? Any feed-back or FUDs to discuss? Note 1 (or more) promises to yourself to realise benefits from our investment Outcome sought – –

Participants & WIIFT Actions & Timescales

2. Outcome sought – –





98


Lesson 8: Estimating For Situations With Less Than Certainty


99

Confidence Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What is confidence (or uncertainty) • How do you express confidence

• How do you calculate it !?


3 course Dinner, with wine for 10 Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

•

How confident are you? 1. Your budget is £30 2. Your budget is £60 3. Your budget is £90 4. Your budget is £120 5. Your budget is £150 6. Your budget is £180 7. Your budget is £210 8. Your budget is £240 9. Your budget is £270 10. Your budget is £300 11. Your budget is £330 12. Your budget is £360 13. Your budget is £390 14. Your budget is £420 15. Your budget is £450

___ 0%_ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

16. Your budget is £480 17. Your budget is £510 18. Your budget is £540 19. Your budget is £570 20. Your budget is £600 21. Your budget is £630 22. Your budget is £660 23. Your budget is £690 24. Your budget is £720 25. Your budget is £750 26. Your budget is £780 27. Your budget is £810 28. Your budget is £840 29. Your budget is £870 30. Your budget is £900

_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ __ 99%_

– State Assumption & Constraints – Plot on following axis 101


Confidence Over a Range? Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Confidence doesn’t change 1:1 with increasing budget – Cumulative confidence typically follows an “S” curve – Incremental confidence typically a skewed bell shape

Confidence 100%

0%

£30 per interval

30

120

210

300

390

480

570

660

750

840

900


Confidence Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• How confident are you the budget/ schedule will be enough ? 100% ~95% 75% 50% 25%

Cumulative Confidence

~80%

Almost a sure thing! Good chance of this May achieve it this ~20% quick/cheap

Incremental Confidence

0% Too risky!

Resources (eg days) Budgeted

Wastefull? 103


2pt v. 3pt Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• 2pt all that is required if we know the shape of the curve and that it is symmetrical – Just the limits: Minimum and Maximum ML & Avg & Middle

Min

Max

• If the curve is skewed 3pts are minimum required – The limits and the peak (Best, Worst and “Most Likely” or Mode) ML


Three Point Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Take an average with most likely more heavily weighted ( Best + Worst + (Most-likely * 4) ) / 6 Mean (& mode & median)

Most Likely (highest point) & Middle & the Average value More likley “Best we can hope for”

Revised “Most Likely” & Middle Where is revised 50-50? Simple Average will ignore MOST likely 50% 50% 95% 5% More likely 80% 20% “Worst case” Common

50% 20% 50% 80%

Budget plus a 1 sixth Budget plus 2 sixths 105 (c) Logical Model Ltd 2007 [email protected]

Budget Allocation Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What we should budget is based on required confidence 50% or “expected” = ((Best + (Most likely * Weight) + Worst) / # terms) – Weighting normally 4 so # terms normally 6 e

E

= (Best + 4ML + Worst) 6 80% = 50% + (Worst – Best) 6 95% = 50% + (Worst – Best) 3

• When allocating the task give the minimum of ML & “e”

1SD 6 SD 106


Exercise: 3pt Arithmetic Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Best + Worst +(Most likely * 4) / (6) • (Worst – Best ) / 6 Try Try these these

• Notice how budget moves towards tail • Contingency based just on width

BB ML ML W W

== 10 10 == 20 20 == 30 30

BB ML ML W W

== 10 10 == 28 28 == 30 30

BB ML ML W W

== 10 10 == 12 12 == 30 30

BB ML ML W W

== 18 18 == 20 20 == 22 22


Define Levels Of Precision Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What the of difference between an estimate produced Roughwas Order Magnitude against a Need one produced against a and lower – Estimate must and be interpreted as between upper Requirement? limits

• Budgetary – Reduced range

ROM

• Definitive – Final range Estimate tthhiningg e m a tthheessameeir n a e n EE tthheir nnlylymmeaA o s GGRREE m o r s e e t m w A r e f TThheesse tveeryyoonneei if wne advvaannccee! ! nd ttooeever initioionnssi in ads ±400%%aand aas ±4 ddeeffinit e ROM M eee RO to +440000%% s t h s g i + t YYoouummighe it aass--4400 to IIsseee it (c) Logical Model Ltd 2007 [email protected]

time 108

Improving Precision Over Time Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

1SD

After design t

e

Po st -f ac

St ar tup Pr D eli es m ig in n ar y

At start-up

D D eta es il ig ed n

• Range narrows & skew changes over time

Max

Most Likely

6 SD Max

Most Likely

Cross-Section @ Detailed Design

Min

Cross-section at start-up

Min

time

Plan View 109


Improved Estimates Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

•

Quality of estimate indicates natural variability of underlying process – Indicated by ratio of the contingency to budget – Contingency : Budget – 2 : 16 (1 in 8 or 12%) worse than 0.3 : 16 (1 in 50 or 2%)

•

10% or less

One SD

– Treat 1sd as 80% confidence & 2sd as 95%

•

Between 10% and 20% – Only credit 1sd as 70% & 2sd as 80%

•

Anything worse requires return to the WBS to decompose the task – Likely the task includes a discrete risk that is distorting the estimates – Worth investing effort to improve estimate

12 13 14 15 16 17 18 19 110 (c) Logical Model Ltd 2007 [email protected]

Assignable Causes & Random Variation Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Distinguish random variations & those with a specific cause – Sign your name 10 times – Imagine someone bumps into you on 1 signature

• Actual results inexactly match estimates due to variances – Estimating basis & range must account for random variations – Risk/ contingency process should account for assignable causes Upper Control Limit

Out of tolerance


Three Parts To Any Estimate Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

3 Parts of a budget in any quantity (Time, money…) • That part derived from the core of the work to be done • That part allowed for as random variations natural to the process and product – May be possible to define cause & effect but we choose not to – Minor, often many in number both good and bad

• That part allowed against specific causes of variation – Potential problems (& opportunities) that we can identify and assess probabilistically not deterministically leoloccitityy e V / ilieless / V – Risks! M = k M r

• Forth element may be reserves – Can only be a guess


wwoork = ightss o t e o v rri ive t afficic--l light n D e h against unexpected D TThe ±±TTrraff ue toorraai in yyddue t ccideenntt a l e D a l ++ De aayyss ttooaaccid-holild e u d d y ue ol -ho i ++DDeelalay ude toosscchhoool112 ppddue t u d e u --SSppeeed

Responses to Uncertainty Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Tolerance allowances – An allowance for natural variations in process execution – Describing causes sufficiently to be assignable is not cost effective – No cost-benefit to making process more capable

• Contingency budget – An allowance associated with restoring alignment between status and plan after an identified and assessed event becomes certain – Relates to an “assignable cause” – Only consumed if the event occurs

• Change budget (philosophically just part of contingency) – An allowance for allocation against a modified plan – Funding for a new set of future intentions and / or new end point 113 (c) Logical Model Ltd 2007 [email protected]

Budgeting the Uncertain Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Allocated budget – What we know we know – The iceberg that sank the Titanic – Core work done & in progress & contingency AFTER the risk trigger

• Unallocated budget – Things we know we do not know – If the iceberg could have been avoided (Between horizon & impact) – Core work not yet started, Plan B that might not be needed

• Reserves – Things we don’t know we don’t know – The iceberg before the Titanic was launched on her maiden voyage Contract Price Contract Budget Baseline (CBB)

Margin

Performance Measurement Baseline (PMB) Distributed Budget Control Account Budgets Planning Packages Work packages (c) Logical Model Ltd 2007 [email protected]

Reserve Undistributed Budget

114


Lesson 9: Adding & Showing Uncertainties


115

What Confidence Of 5 Weeks Parallel Tasks


B=3 B=3ML=5 ML=5W=7 W=7

B=3 B=3ML=5 ML=5W=7 W=7

•

Assuming even chances of each task duration then what is the probability of this project taking… – 3 weeks – – 5 weeks – – 7 weeks –

/ About % / About % / About %

B=3 B=3ML=5 ML=5W=7 W=7


Over-Allocating Contingency Serial Task


•

What schedule is needed for the following (1/10 chance of the extremes)? – Task 1 Best estimate 1 day (1 in 10 chance), worst 99 days (1 in 10 chance) – Task 2 Best estimate 1 days, worst 99 days – Task 3 Best estimate 1 days, worst 99 days

t1

t2

– 1d+1d+1d = 3d if EVERYTHING perfectly – 99d+99d+99d = 298d if EVERYTHING awful – (1d+99d)/2+(1d+99d)/2+(1d+99d)/2 = 50d+50d+50d = 150d

t3 ?/? chance ?/ chance ?/?

• How often will 298 be required? When is 150 “ok”? – Is 50 plus 16 plus 50 plus 16 plus 50 plus 16 = 198 “better”? 117 (c) Logical Model Ltd 2007 [email protected]

Confidence in Schedules


• Each task B=1, ML=50, W=99, E=50, σ=16.7 – 50+50+50+16+16+16 is not 80% case! (ie only 1/5*1/5*1/5 chance)

• Will only need 16+16+16 in the 20% * 20% * 20% of cases – 20% * 20% * 20% = .8% or 1 / 125 – 198 is the 99.2% confidence t1

t2 SD =

t3

√ SD12 + SD22 + SD32 = 27.7

150+28 = 80% confidence 118 (c) Logical Model Ltd 2007 [email protected]

Departmental Budget Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• You have 3 projects you want to run next year, what should you request from the funding committee • Project 1 Best = 2m • Project 2 Best = 4m • Project 3 Best = 4m

ML = 5m ML = 6m ML = 5m

Worst = 6m Worst = 11m Worst = 6m

• Should you ask for 6 + 11 + 6m ? • How much contingency should you include in the requested budget 119 (c) Logical Model Ltd 2007 [email protected]

Departmental Budget Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• What SD for the three projects we just looked at – Project 1 B = 2m ML = 5m W = 6m – Project 2 B = 4m ML = 6m W = 11m – Project 3 B = 4m ML = 5m W = 6m

.E 0.67 6.5 5 12.2m

.SD .67 1.17 0.33

.sd2 .44 1.36 0.11 1.91

• Contingency = √1.9 = 1.38 • 50% budget = 12.2m • 80% budget = 12.2 + 1.38 = 13.58m


Reality & Simplicity 14note: Please 18 report unlicensed 7 14 18 26 Licensed for individual use without fee. A commercial license ([email protected]) removes this commercial use & share in fees levied

1 4 6

0

1 4 6

B 2,3,6

A 1,4,6 0

3 6 8 6 7 9 8 10 12

5

4 1 4 6

G 4,4,4 15 19

7

17

10

E 3,3,4 14 17

8 5 8 10 6 9 11 8 11 13 C 4,5,7

4

D 4,7,11 8 15

27

27

H 8,10,15 17 27

I 2,3,3 19 22

•

Project expected

= ∑ ( e1 + e2 + e3 + e4…….

•

Project sd

=

27

25

K 4,5,6 22 27

√∑(sd1**2 + sd2**2 + sd3**2 + sd4**2 + …) 121


29

L 2,2,2

5 8 10 11 13 15 14 16 18 16 17 16 6 9 11 12 14 16 15 16 19 18 19 19 8 11 13 14 16 18 18 19 21 20 21 23 20 F 6,8,10 9 17

9

J 7,8,10 19 27

29

Calculating Contingency Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

Task

Best

ML

Worst

e

SD

CP 1.00

Float

SD*SD

A

1.00

4.00

6.00

3.83

0.83

B

2.00

3.00

6.00

3.33

0.67

C

4.00

5.00

7.00

5.17

0.50

D

4.00

7.00

11.00

7.17

1.17

1.00

1.36

E

3.00

3.00

4.00

3.17

0.17

7.00

0.03

F

6.00

8.00

10.00

8.00

0.67

G

4.00

4.00

4.00

4.00

H

8.00

10.00

15.00

10.50

1.17

I

2.00

3.00

3.00

2.83

0.17

2.00

0.03

J

7.00

8.00

10.00

8.17

0.50

1.00

0.25

K

4.00

5.00

6.00

5.00

0.33

2.00

0.11

L

2.00

2.00

2.00

2.00

0.00

Length of CP & Total Effort

E=63.17 CP=29.5

Schedule Protection

0.69 1.00

1.00

0.69

0.44 0.25

1.00

0.25

0.44

0.44

1.36

1.36

1.00 1.00

1.00 Effort & CP protection

0.00

0.00

2.23

1.66


Showing Schedule Contingency Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

A 1,4,6

D 4,7,11

G 4,4,4

B 2,3,6

E 3,3,4

H 8,10,15

C 4,5,7

F 6,8,10

I 2,3,3

Pros Pros and and Cons Cons of of showing showing contingency contingency explicitly? explicitly?

J 7,8,10

L 2,2,2

Contingency 1.66

K 4,5,6

• If you can keep your head when all about you are losing there’s. You didn’t understand the plan (c) Logical Model Ltd 2007 [email protected]

123

Monte-Carlo Analysis Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Software tool to calculate probabilistic project duration


Showing Cost Contingency Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• 3pt estimates for work yield expected cost / schedule and standard deviation

– Sum costs , calculate project (or phase or path standard deviation) – Plot on cumulative cost curve Other Allowances & Reserve

Tolerance?

∑£sd = √ (sd1**2 + sd2**2 + sd3**2 + …) ∑£e = ( e1 + e2 + e3 + e4…) or staff-days or any other quantity

Time SD


Retiring Contingency Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

%age contingency used or retired by value

Contingency used

Fear

WorstCase Budget £/ Hrs 50% Budget

Hope

BestCase (all opportunities) 126 (c) Logical Model Ltd 2007 [email protected]

Exercise: Estimating Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

How many sweets are there & what is their value? • Step: 1m Rotate the roles • Step: 3m Understand the problem, Identify the techniques that may help produce a good estimate and agree team approach – Be sure to assess the factors that your result is most sensitive too not just those you think you can establish with most precision

•

Step: 10m Estimate the number of sweets AND value based on:… – The number of different colours of sweets – Assign each a value from the table below – You must nominate which colour is 1st , 2nd, etc BEFORE you open the sweets 1st Colour each sweet worth 1p 2nd Colour 2p each 3rd Colour 4p each 4th Colour 8p each Etc – Calculate the estimated “value” of the packet contents

•

Step: 3m Give me your values



•

Your asked to draw-up a modification to a ship – – – –

•

Are the sweets relevant ? What are your sweets now? How many of each? What are their values?

Steps and variations – How did you assess the bag of sweets – How could you assess “the change to the ship”

•

What is not yet fully understood, what is still missing – What makes this method useless and what makes it useful

•

What are your feelings about “doing it”? – What are the reasons that you won’t use these steps?

•

Old beliefs do not lead to new cheese 128


Review Licensed for individual use without fee. A commercial license ([email protected]) removes this note: Please report unlicensed commercial use & share in fees levied

• Discuss with your colleagues what we have covered Record on a flip-chart – Mark with A Triangle every-thing that gave you a new angle on existing knowledge – Things that told you something quiet new or different to your existing knowledge a Lightening Flash – Old knowledge improved: misconceptions resolved or missing parts supplied – A Circle – For things that agreed with what you already knew a Square and a Cross for disagreed with



• • • 1.

What needs recapping? Any feed-back or FUDs to discuss? Note 1 (or more) promises to yourself to realise benefits from our investment Outcome sought – –







130


Please would you complete the evaluation form overleaf – Thnx 

Appendices


131

There are other free sources of our valueadd on our web-site www.logicalmodel.net


•

For further help & assistance – [email protected]

•

Consultancy & training in – Basic structured project management – Tools and techniques for advanced project & programme management – Leading complex projects – Recovery of struggling projects – Creating & running PMOs – Project Risk and Quality Management – Using Earned Value Analysis – Board briefings on project control & governance

+44 (0) 84 52 57 57 07

•

Continued… – Dimension Four® Benefits Realisation Method training and consultancy – PRINCE2® Exam preparation & PRINCE2® use in the real-world – Implementing IT Governance using the CobiT® Framework – Implementing Benefits Realisation & Lessons Learned processes


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