Estimating Based on a Model of Project Execution

I initiated and managed a lot of projects over my career of 30 years or so. Along the way, I observed some common mistakes, both my own and others, that impact the quality of estimates for cost and schedule. Much of this comes down to the way these estimates are prepared. I’ve got a few thoughts to share on managing the preparation of preliminary estimates, so that proposed projects can be approved based on information that the decision makers can believe reflect an understanding of both the problems and the solutions, and how to achieve them.

An Estimate is Based on a Model

Any estimate of the labor and non-labor costs of planned work must be based on an understanding of what work needs to be done, how it will be accomplished, and who will perform the work. In other words, a project plan. A good estimate should reflect a range of possible values, with a confidence level, and should document identified risks and related assumptions, including an assumed start date.

A Schedule, Not A Plan

A project plan is not merely a schedule, depicted in a Gantt chart. It reflects a number of decisions, from scope and high-level requirements to how the transition from the current state to the end state will occur. It takes constraints, non-functional requirements, and relevant organizational processes into consideration. In addition to direct work on deliverables and supporting activities in the Work Breakdown Structure (WBS), it includes plans for activities such as acquisition, staffing, cost reporting and budget management, risk management, security, and likely others. All of these plans are combined in what is known as integration management. Taken together, they constitute a model of how the project will be executed, which can be used as a basis for meaningful estimates.

What, How, and Who

The matter of what work is to be done is reflected in the WBS. The most meaningful estimate of project costs is rolled up from estimates for each work package. Note that initial work package estimates should assume that all inputs and other resources will be available. Dependencies must be planned for, but work on that when scheduling, rather than when when estimating. There are usually few completely new tasks in most projects, and past experience should drive estimates, even if different people will perform the work. Three-point estimates should be prepared for each work package—most optimistic, most likely, and most pessimistic. These parametric estimates can then be used in Monte Carlo simulations of the project.

 

 

How the work will be accomplished is a technical matter. An architecture or technical approach document, based on the high-level capabilities required for the delivered product, is a practical minimum. A more detailed design document is better, if available for an initial estimate. Either way, know how you’re going to skin this cat! Make any necessary assumptions and document them to be delivered as part of the overall estimate model.

Note that the who doesn’t usually need to be a specific, named person. It’s helpful to have an assigned team before any estimates are required, but that isn’t usually the case, unless it’s a purely internal project to be performed by an established team. It is conventional wisdom that those who will perform the work provide the most accurate estimates, but that isn’t always the case.  For projects where some of the work will be performed under contracts or by contingent workers, you may have to make estimates with a lower confidence level, but that doesn’t mean that they can’t be useful.

Reducing Uncertainty

The goal of estimating should be to reduce uncertainty to a level where decisions and commitments can be made. Not commitments to a precise cost or schedule, but simply to proceed, in pursuit of specific benefits. And that decision to proceed must always be contingent on evidence of progress commensurate with expectations. As the project progresses, actual cost and labor figures can be used to update the estimate, further reducing uncertainty, so that decision makers can re-commit to continuing the project. As the project plan and schedule evolve, the estimate model should track that evolution. A baseline estimate is necessary, but so is a current estimate.

The best estimates open a dialog. You wouldn’t seriously support the Hashtag, “#NoCommunicating,” would you?

In Closing

We should not manage on a ballistic trajectory, where nothing can change between pulling the trigger and impact on the target. Like modern guided missiles, continuous corrections must be made, in order to optimize the effects of scarce resources—human, financial, and calendar. Agile methods are commonly used these days, but there are others, such as stage gates. Whatever governance model is used, a detailed estimate model, updated throughout project execution, will provide much better decision support than a round number.

 

 

 

New PM Articles for the Week of March 16 – 22

New project management articles published on the web during the week of March 16 – 22. And this week’s video: Harry Hall talks about the need to identify a risk owner along with the project risks you want to manage. 3 minutes, safe for work.

Ethics, Business Acumen and Strategy

  • Zorana Ivcevic and colleagues reports on results of a survey that found an alarming level of pressure to act unethically in US organizations. 5 minutes to read.
  • Ron Rivers examines the intersection of technology and labor, from early history to the near future. 13 minutes to read.
  • Adam Rasmi reports that COVID-19 is also impacting negotiations between the UK and EU on a post-Brexit free trade agreement. 2 minutes to read.

Managing Projects

  • Mike Clayton explains how to manage multiple projects at once. Video, 15 minutes, safe for work.
  • Marina Pilipenko tutors us on project cost management. 7 minutes to read.
  • Peter Landau coaches us on making a procurement management plan. Part of it is a commercial, but you also watch television, right? 6 minutes to read.
  • Jory MacKay guides us through writing a communication plan. 9 minutes to read.
  • Brad Egeland walks us through the process of handing a project off to another project manager. 4 minutes to read.
  • The nice folks at Clarizen compiled a list of five books that every project manager should read. 3 minutes to read.

Managing Software Development

  • Stefan Wolpers curates his weekly list of Agile content, from what drives performance of a distributed agile team to disagreement in distributed teams to the magic of conflict. 7 outbound links, 3 minutes to read.
  • Kiron Bondale argues that domain and organizational knowledge are the key requirement for prospective product managers. 3 minutes to read.
  • Tanay Agrawal suggests that product managers need to see their product like a new user, every single day. 5 minutes to read.
  • Henny Portman shows the difference between incremental and iterative Here’s Part Two, about ten minutes to read both parts.
  • Ankur Jain explains a diagram of the DevOps life cycle. 2 minutes to read.
  • Maximilian Bauer says that being smarter about test cases and how they are structured can save money in testing. 7 minutes to read.

Applied Leadership

  • George Pitagorsky tells us how to manage fear and anger in projects. 5 minutes to read.
  • Christine Trodella has some thoughts on managing newly remote workers, when you don’t know how long they’ll be working from home. 7 minutes to read.
  • Sharlyn Lauby uses the Marvel Cinematic Universe to illustrate keys points on how to manage the external workforce, both project-based and recurring. 4 minutes to read, plus a video interview, 10 minutes, safe for work.
  • Amelia Salyers curates a list of 22 articles for leaders from the past few years, published by venture capital firm Andreeson Horowitz. 5 minutes to read the synopses.

Cybersecurity and Data Protection

  • Curtis Franklin gives us a brief overview of how to quantify cybersecurity risks. 4 minutes to read.
  • Brenda Sharton sees plentiful opportunities for cybercriminals in the new “work from home” mantra of COVID-19. 4 minutes to read.

Pot Pourri

  • Elizabeth Harrin gives us some useful pointers for setting up our home office. 4 minutes to read.
  • Stephanie Vozza notes that generalists tend to be more successful, but only if they get really good at a few useful skills that combine to make them stand out. 3 minutes to read.
  • Sarath C P shares six tips for creating an effective elevator pitch. 5 minutes to read. You’ll need to find your own elevator …

Enjoy!

New PM Articles for the Week of February 24 – March 1

New project management articles published on the web during the week of February 24 – March 1. And this week’s video: Mike Clayton suggests a routine to deal with the feeling of being overwhelmed by pruning and prioritizing your to-do list, and then working it aggressively. 9 minutes, safe for work.

Ethics, Business Acumen and Strategy

  • Pierre Haren and David Simchi-Levi expect that the full impact of COVID-19 on the global supply chain will hit us in mid-March and could continue for months. 4 minutes to read.
  • Edd Gent reports that tech manufacturing depends on 23 rare minerals that have significant supply chain risk. The analysis is as interesting as the finding. 3 minutes to read.
  • David Rotman reports that Moore’s Law is dead (sort of) and explains what that will mean for the trajectory of technology. 9 minutes to read.

Managing Projects

  • Elizabeth Harrin shares ten tips for preparing meeting minutes. You can delegate notetaking but take responsibility for preparing the minutes! 6 minutes to read.
  • Carsten Lund Pedersen and Thomas Ritter suggest a framework for predicting the chances of success for your new Big Data project. 7 minutes to read.
  • Erik van Hurck shares three tips for working with Microsoft Planner. 5 minutes to read.
  • Kiron Bondale suggests an interesting technique for increasing alignment on delivery approaches: uncertainty poker. 3 minutes to read.
  • Glen Alleman posted a list of books and documents that should be of use to teams who are engineering complex systems. 3 minutes to read.
  • Johanna Rothman examines the merits of collecting labor hours expended for capitalizing projects. Abandon all expectation of accuracy and you’ll be fine. 5 minutes to read.

Managing Software Development

  • Stefan Wolpers curates his weekly list of Agile content, from liberating structures to measuring a complex reality to making decisions in complex situations. 7 outbound links, 4 minutes to read.
  • Andre Schweighofer tells how the Adidas tech team decided to stop estimating story points and found a more effective approach for the way they worked. 6 minutes to read.
  • Craig Brown talks about backlog bankruptcy—having so much on the backlog that you can never get down to zero. 2 minutes to read.
  • Nishi Grover Garg explains the tester’s notion of bug advocacy, and when to advocate. Think about encouraging your testers to be advocates. 3 minutes to read.
  • Tom Cagely interviews Todd Miller and Ryan Ripley on their new book, Fixing Your Scrum: Practical solutions to common Scrum problems. Podcast, 40 minutes, safe for work.
  • Robb Pieper discusses the pros and cons of having technical or business domain knowledge as a Scrum Master. Video, 2 minutes, safe for work.

Applied Leadership

  • Greg Satell focuses on the lessons learned about leading change in Lou Gerstner’s tenure as CEO of IBM. 5 minutes to read.
  • Karin Hurt coaches us on how to manage a strong, arrogant, slightly obnoxious high performer. 4 minutes to read.
  • Dmitriy Nizhebetskiy tells us how to introduce ourselves as the PM on a new project. Video, 13 minutes, safe for work.
  • Jamie Davidson suggests nine tips for developing great remote management skills. 5 minutes to read.
  • Art Petty sums up the way we assess effective leadership in others as the Four C’s. 4 minutes to read.

Cybersecurity and Data Protection

  • Eric Griffith dives into the FBI’s cybercrime statistics for insights into the what might be the biggest threats. 3 minutes to read.
  • Gilad David Maayan shares proven practices for responding to Big Data breaches. 5 minutes to read.
  • Joan Goodchild reports on the growing debate over whether foreign-made tech products can be made safe for use by the US government in critical infrastructure. Yes, they mean Huawei. 3 minutes to read.

Pot Pourri

  • Elizabeth Grace Saunders suggests self-care for working parents approaching burn-out. 6 minutes to read.
  • Leigh Espy lists seven reasons why networking is critical for a successful career. 4 minutes to read.

Enjoy!