Get better estimates and avoid unrealistic due dates

Get Better Estimates(and avoid unrealistic due dates)

June 19, 2014

www.vertabase.com

Mark Phillips | [email protected]| 248 914-3774

@markphillipspm | LinkedIn.com/in/markphillipspm

http://www.vertabase.com/

https://twitter.com/markphillipspm

http://linkedin.com/in/markphillipspm

Too often estimated completion dates are fantasies spun by optimistic project teams or unrealistic demands from clients which leave us scrambling to achieve.

In this tightly focused, 20 minute webinar, learn how to create more realistic estimated completion dates and improve your ability to work with clients on unrealistic deadlines.

We’ll also talk about the process of estimating in general.

In fact, that’s where we’ll start….

Webinar Description

June 19, 2014VERTABASE.EVENTBRITE.COM

(c) Vertabase Project Management Software 20142

Estimates are like seeds in the ground. It isn’t wise to pin your hopes on an unsown crop.

Estimates are “best guess” plans.

The smartest people in the world, with the best models around, can’t make accurate predictions. Weather, F-35, etc.

People who make 100% accurate predictions are prophets. People who accomplish things without knowing the future are effective managers.

Nonetheless, as project managers and business people we need to make estimates.



What are Estimates

Estimates are targets, not guarantees.

If the target is too far, too small, too high, you won’t be able to hit it no matter what. It has to be realistic.

Make realistic estimates.



We make all sorts of estimates including costs, pricing, resource needs, even the WBS and schedule are estimates. They are “best guesses” of how to get something done over a specific period of time.

Today, we’re focusing on one estimate that causes us to scramble like crazy as projects get closer to completion.

Estimated Completion Dates.



You know, if you look at the classic PM literature, things are supposed to get easier as the project progresses. But in most projects, the last 5% of getting the project done takes up at least 20% of the time, resources and aggravation.

This is because of unrealistic estimated completion dates.



Don’t believe the Hype

Where do Estimates come from?



“I’ve been doing this for decades and I know how long it takes”

“It doesn’t matter how long it takes, I need it by x day no matter what”

“I know I was supposed to get this information back to you in order to get done on time but I couldn’t so now you just have to figure out how to get it done anyway”

“You’ve done this a million times, I’m sure you can do it faster”

“You said you’re the expert. Google or GE or GM etc., already does this so you don’t have reinvent anything, just get it done”

“I really want this project, so I’ll say whatever I need to to get it”

“We are pretty smart people, we’ll figure out a way to get it done in time.”

“It doesn’t look that different from other projects we’ve done, we have a good handle on the time it takes”

“We’ve done this for other clients, why should this client be any different”



All the wrong places:

“In God we trust, all others must bring data”

W. Edwards Deming



Quick and Dirty.

Use data from past projects. Do you collect data from past projects?

Do you look at it before estimating a new job?

Add in margin of error for every new element. Do you identify “what’s new” in a new projects?

Do you consider the “new” when estimating?



A Better Place: Parametric estimating focused on the new

1. Identify the critical steps that you’ve done before

2. Use data from previous projects that are similar

3. Identify what is new about the project e.g.• New deliverables• New design• New people on the team• New customer• New time of the year• New total workload on the team or organization

4. For everything new, add a margin of error of 50%. Put it directly on the element that it comes from e.g. if it usually takes 10 hours for old design, it will take at least 15 hours for a new design.

Note, it is not a knock against anyone’s knowledge or talent, it is a reality of introducing new elements into a process.



Time passing.The larger the project, the farther out to due date, i.e. the more time passes between start and finish, the greater the margin of error.

More stuff can happen along the way.

Quick and Dirty Rules of Thumb

For two weeks to a month, no need for additional margin

Once it gets to 6 weeks, add in another 20%

Once it gets to three months or more, add in a further 30%.

If it is 1 year out, add in 50%



One more critical dimension to estimating….

USE DATA TO PROVE YOUR POINT

Tell them from the get go that the project is at risk.

From the get go, and often.

Scotty.

It isn’t your fault. It is a simple matter of the constraints and the potential for unexpected events to occur.

Have data to back up your assessment



What to do about people who force unrealistic dates on you

“Help me data, you’re my only hope.”



If a due date is absolutely positively locked in stone.

CUT SCOPE

If the scope can’t be cut

MORE AND MORE BUDGET

BUT… this is a law of diminishing returns, 2x the people doesn’t get you 2x faster. And remember, your management overhead will go up, so build in budget for more pm time, meetings, reports and support resources.

ALWAYS keep telling them that it is still at risk and unrealistic.



At some point, they will be ready to believe it…let them know that date is unachievable. Because it will be.

It is obviously better to cut losses ahead of time, but many people are caught in the trap of optimism and will push ahead regardless.

Everyone thinks of the heroic episodes of pulling the project off at the last minute.

But the statistics are clear, a vast majority of projects don’t.

The project suffers, the organization suffers, the team suffers and the idea behind the project (which may have been a great one) suffers.



And inevitably…

Use data.

Identify “new” elements.

Add in significant margin for each “new” element.

Be realistic.

Don’t be afraid to speak the truth.



• HM Green Book – extract

• NASA –conspiracy of optimism

June 19, 2014VERTABASE.EVENTBRITE.COM (c) Vertabase Project

Management Software 201418

Related Material: HM Green Book

RELATED MATERIAL



OPTIMISM BIAS

1 INTRODUCTION AND RATIONALE

1.1 There is a demonstrated, systematic, tendency for project appraisers to be

overly optimistic. To redress this tendency appraisers should make explicit,

empirically based adjustments to the estimates of a project’s costs, benefits, and

duration.

1.2 As discussed in the Green Book, it is recommended that these adjustments be

based on data from past projects or similar projects elsewhere, and adjusted for the

unique characteristics of the project in hand. In the absence of a more specific

evidence base, departments are encouraged to collect data to inform future estimates

of optimism, and in the meantime use the best available data.



HM Green Book – Supplemental Guidance for Optimism Bias, UK

Source: https://www.gov.uk/government/publications/green-book-supplementary-guidance-optimism-bias



https://www.gov.uk/government/publications/green-book-supplementary-guidance-optimism-bias

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Get better estimates and avoid unrealistic due dates