Chapter 13 Review

Solving Common Project Problems


This chapter provides an overview of common challenges and recommends strategies for applying the tools presented in the text.

• Responsibility beyond your authority, use project document to substantiate your role.
• Charter
• Statement of work
• Communication plan - make sure this is a two-way medium so you'll know they are up-to-date and involved.
• Small work packages with strong completion criteria - make assignments easy to understand and track; involve the team in estimating the cost and duration of tasks and in defining the completion criteria.
• Network diagram - show how they fit in the project; emphasize the importance of their contribution.
• Project status meetings with an open task report - provide updates even during times that they are not directly involved.
• Sponsor - develop a strong relationship with your sponsor by keeping him or her informed of your plans and progress.
• Disaster recovery: the PM is removed and you have to pick up the pieces, what do you do?
• Statement of work - start at the beginning with the project. Prioritize the remaining scope, clarify the penalties for running over budget or missing the deadline.
• Project plan - using the work breakdown structure and critical path analysis figure out the best possible schedule scenario assuming infinite resources to determine the absolute shortest possible schedule. Then, negotiate for more resources, more time, or less scope based on your plan. Use your critical path schedule to show management which resources you will need to get to project done as fast as possible. Allow for project team learning time.
• Work package estimates - use the actual performance so far to create realistic estimates and include the team in the estimating process.
• Project status meetings - frequent status meetings focused on completing near-term tasks will keep you on top of progress and allow you to solve problems early. Use the open task report to keep your meetings brief and productive. Graph the process on the plan for everyone to see -- it's tangible progress. Celebrate small victories.
• Reducing the time to market
• Statement of work - getting agreement from all stakeholders will ensure you don't waste time with organizational battles.
• Fixed-phase estimating - no point in generating a detailed schedule from start to finish, instead choose several reveiw points where you can reevaluate the functions of the product against the available resources and deadline.
• Project plan - develop a detailed plan for every phase. Using a network diagram identify all concurrent tasks. These are places where adding people can compress the schedule.
• Completion criteria - build quality check into the project at every step of the way
• Project status meetings - be clear about the responsibilities and track schedule progress rigorously. Create a culture of accountability. Celebrate successes along the way.
• When the customer delays the project
• Network diagram - look for other activities that the team can shift its attention to; this is also the tool for assessing the impact of the delay.
• Change management - determine the costs and schedule impacts of the delay. Document the reason for the delay as well as the cost and schedule impacts and bring it to the customer's attention without delay. Show the unexpected delay on the project plan by adding a task to the WBS called "Delay due to ____" and insert the delay in the network diagram too. If the delay idles any of your team members you can start assigning hours to the delay task.
• The impossible dream: you've been handed a project with an impossible budget and schedule. What to do?
• Statement of work - be extremely clear about the project's purpose, scope and deliverables. Learn all the schedule and cost penalties.
• Project plan - develop at least three options for what can be done, you must be able to demonstrate the trade-offs available to the managers. Recommend the option that seems to match their cost-schedule-quality priorities. Determine the maximum number of people you can usefully apply to the project using the network diagram and resource spreadsheet. Look for schedule adjustments that will bring the greatest cost reductions. Use a crash table to analyze the most cost-effective tasks to compress.
• Risk management - perform a risk assessment at both the high level and the detail level to find your danger points.
• Status reports - don't give up on changing your stakeholders expectations. Let them know with each status report how diligently the team is striving to meet the goals and what the actual progress is. Raise the alarm frequently that if early progress is an indicator, actual cost and schedule performance won't match the plan.
• Fighting fires - no time for definition and planning activities
• Organizing for project management - get organized before the fire starts, a systematic method for using PM techniques will increase your ability to respond quickly to any situation.
• Managing volunteers - no authority over the team of unpaid volunteers
• Statement of work - build enthusiasm and common vision by focusing on the purpose and deliverables.
• Small tasks with strong completion criteria - make it easy for each person to succeed by giving everyone clear direction and little latitude for straying from the task.
• Project plan - be extremely organized and very aware of critical path and float. You will need to do some resource analysis.
• Communication plan - develop a method of staying in touch with everyone without a lot of effort or frequent meetings
• Status meetings - frequent status checks will keep you in touch with progress, but periodic meetings are an opportunity to energize the group, build relationships, make project decisions, and celebrate progress. Ensure that these are productive meetings that people want to attend.
• MANAGE PROFESSIONALS LIKE VOLUNTEERS
• Peter Drucker says they want the same things: interesting, meaningful work that is a good use of their time.
• Achieving the five project success factors
• Agreement among the project team, customer, and management on the goals of the project.
• A plan that shows an overall path and clear responsibilities, which is also used to measure progress during the project.
• Constant, effective communication between everyone involved in the project.
• A controlled scope
• Management support 

Chapter 12 Review

Measuring Progress

The key to finishing a project on time and on budget is to start out that way and stay on track throughout. Progress measurement tools are how we identify problems when they are small, when there is still time to catch up. Cost and schedule progress comprise two-thirds of the cost-schedule-quality equilibrium and are the primary focus of progress measurement.

• Measuring schedule performance
• Each work package in the plan is a measurable unit of progress, each has start and finish dates.
• The primary tool for illustrating a schedule is also good for displaying schedule status, the Gantt chart
• Use the 0-50-100 rule
• To simplify task reporting use 0% complete for tasks that have not yet started, 50% for tasks that are in process, and 100% for completed tasks. Since no work package is greater than 80 hours of work no task should be in progress for more than one week. If it is you know that there is a problem.
• Every work package should have completion criteria and should not be considered complete until it meets these criteria.
• Schedule completion measure accomplishment, not the effort expended.
• Measuring cost performance
• Cost performance is acutely critical because cost measures productivity
• Each work package has estimates for labor, equipment and materials
• Be sure to capture actual costs and compare planned and actual costs to determine whether the project is progressing as planned
• How to get cooperation in reporting labor hours
• Point out that there is a legitimate need to track actual labor hours. It provides early warning on cost problems and improves estimates on future projects.
• Make it easy to report by using the largest increments possible for reporting actual hours
• Problems associated with graphing cost performance
• The rate at which money is being spent doesn't indicate whether the work is getting done
• Accounting lag time can make cost information arrive months late
• Earned value reporting
• To get a true picture of cost performance, the planned and actual cost for all completed tasks need to be compared. Earned value reporting uses cost data to give more accurate cost and schedule reports by combining cost and schedule status to provide a complete picture of the project.
• Calculating cost variance using earned value
• Planned cost
• Budgeted cost of any or all tasks
• Budgeted cost of work performed (BCWP)
• The planned cost of tasks that are complete
• Actual cost of work performed (ACWP)
• The actual cost of tasks that have been completed
• Cost variance (CV)
• CV =BCWP-ACWP
• Cost variance percent (CV%): the cost variance divided by the planned cost
• CV%=CV/BCWP (positive CV% is good/under budget, negative CV% is bad/over budget)
• Cost performance index (CPI)
• Earned value (BCWP) divided by actual cost (CPI > 1.0 = under budget; CPI > 1.0 = over budget)
• Budget at completion (BAC)
• The approved budget for the project
• Estimate at completion (EAC): the reestimate of the total project budget
• The original budget is multiplied by the ACWP and divided by the BCWP.
• Estimate to complete (ETC): budget amount needed to finish the project based on the current CPI
• ETC=EAC-AC
• Variance to completion (VAC): estimated difference at the end of the project between budget and actual cost.
• VAC=BAC-EAC
• New terminology used by the PMI
• BCWS=PV
• BCWP=EV
• ACWP=AC
• Use cost variance to identify problems early
• Recalculating the estimated cost at completion using earned value implies the current trends will continue.
• Calculating schedule variance using earned value
• Earned value calculations can help measure schedule variance just as they help measure cost variance. It is useful because it takes into account the number and size of tasks that are behind schedule:
• Budgeted cost of work performed (BCWP)
• budgeted cost of tasks that are complete
• Budgeted cost of work scheduled (BCWS)
• budgeted cost of work that should have been completed to date
• Schedule variance (SV)
• the difference between the value of the work that was planned for completion and the value of the work that was actually completed
• SV=BCWP-BCWS
• Schedule variance percent (SV%): schedule variance divided by the planned cost to date
• SV% = SV / BCWS
• Schedule performance index (SPI): SPI > 1.0 = ahead of schedule; SPI < 0 = behind schedule
• SPI = BCWP/BCWS
• Graphing an earned value chart yields the most accurate presentation of a project's cost and schedule performance.
• Earned value is an easy calculation if you have a detailed plan and capture actual performance data.
• The WBS is critical to a successful earned value calculation. 
• Each task on the WBS must be a discrete task that meets the following criteria:
• Defined start and finish dates
• Produces a tangible outcome whose completion can be objectively assessed
• Costs must be assigned to the task, even if they are only labor costs
• Problems occur when the WBS contains one of the following mistakes:
• WBS tasks should rarely represent an ongoing activity, these are called level of effort (LOE) tasks and require some basis staffing level throughout the project
• PM time is an example of an acceptable LOE
• It is not possible to track cost or schedule variance within an LOE task that has not been adequately broken down.
• LOE tasks produce the illustion that the task is on schedule and on budget until it doesn't finish on time and every subsequent day costs and schedule variances increase.
• An LOE task that is understaffed sends the message that it is under budget because fewer people are working on the task than originally budgeted.
• Keep the lowest level tasks small, if the work packages are large, the variance is likely to be skewed (+/-) from week to week.
• Data isn't information
• Trends are more useful than snapshots. Forecasting on trends tells us whether our management strategies are working.
• Schedule variance doesn't tell the whole story. Projects with many concurrent tasks benefit from calculating variance because many are bound to be ahead and others late. If the critical path tasks are late, the entire project will be held up.
• Watch the schedule variance and the critical path.
• Size increases complexity for earned value.
• The projects that benefit most from earned value calculations have the greatest challenges implementing it.
• Escalation thresholds
• The determining factors for who handles a problem or approves a solution are its cost and schedule impacts. Thresholds accomplish several important functions:
• Change management thresholds separate the changes the project team can approve from the ones that require board approval
• Problem-solving thresholds bring the appropriate level of attention to specific problems.
• Rising a problem to the appropriate level immediately minimized the negative impact. Don't wait for regularly scheduled project meetings.
• Cost and schedule baselines
• Comparison point
• Planned and accepted cost-schedule-quality equilibrium for the project.
• A new baseline should be as realistic as possible and reflect the level of performance that led to the baseline change.

Chapter 11 Review

Clear Communication among Project Stakeholders


Project communication ranks high among the factors that make a project successful. Constant, effective communication among everyone involved in the project is facilitated using the project management techniques described in the text, all of which are essentially communication tools. This chapter describes the communication responsibilities of the PM, summarized as follows:

• Communicating with the project team comprises four areas:
• Responsibilities - each team member need to know what part of the project s/he has responsibility
• Make task assignments clear by observing these basic rules:
• Explain the deliverables
• Be clear about the level of effort expected and the due dates
• If you know of any obstacles or special information they'll need, make sure they know it too. Set them up for success.
• Hand out work assignments personally, allowing plenty of time for questions and discussion
• Coordination - enables the team to work together effectively
• Start the project with a bang, have a kickoff meeting. The kickoff meeting brings all the stakeholders together to look each other in the eye and commit to reaching goals. One format would be:
• Sponsor leads the meeting and explains the project purpose and connection to the overall business
• Customers are introduced and they offer an explanation of the project's importance to their business
• PM is introduced and is enthusiastically endorsed by the sponsor
• Project team members are introduced. (Vendors and contractors also need to be introduced.) On big projects there are usually too many team members to introduce, so have kickoff meetings for teams within the project too.
• Project memorabilia are distributed. They help create a sense of unity and team spirit - don't wait until the project conclusion.
• Celebrate. Everyone needs to get to know each other and communicate their enthusiasm for the project.
• Enlisting Cooperation (Marlene Kissler)
• When working with people outside your group, department or company, you must overcome a tendency to minimize contact. These are the people who need interpersonal contact the most. Some tips include:
• Make personal contact. Establish rapport face-to-face.
• Start with a warm-up visit, a brief introductory meeting at a mutually convenient time. Send a friendly memo with a succinct overview of your project prior to the meeting and allow them ample time to review it and bring their questions.
• Ask for their help. Ask if they can meet the project schedule, giving them an opportunity to say no. Make sure they have realistic workload support from their manager.
• Personally introduce them to their contacts and technical resources in your company or department. Sit in on high-level meetings if necessary. Make sure your group is accessible and helpful.
• Provide an in-depth explanation in person including documentation they can refer to later. Don't force them to ask for anything.
• Invite them to all meetings and treat them like full team members.
• Include them in the information loop and make sure they are on all relevant distribution lists.
• Do milestone check-ins. Personally review the deliverables and catch miscommunications up front. Be explicit in your feedback about what has been done right and what needs improvement.
• Include them in all acknowledgement meetings and accomplishment write ups. Make acknowledgments appropriate to their level of contribution.
• Write them personal thank you notes.
• Write a memo to their supervisor specifically describing their contributions. Be fair, honest and timely with your report.
• If you don't employ these soft management skills, all the hard skills in the world won't get the project completed.
• Every component and every person on your project is important, and this includes interfaces with projects and people outside your project.
• A good project manager wants to be known as a person with whom people want to work.
• Set communication expectations
• Managing expectations applies equally to project communication
• Put the communication structure in place by setting up the structure for meetings and status reports, establishing the location of issue logs, and publishing change management procedures
• Configuration management
• Identify items/products
• Establish the control structure
• Assign configuration management responsibility
• Status - team members must be kept up to speed on the status of the project
• Schedule individual status meetings with every member of the team on a regular basis.
• You can't make them more productive if you don't know what they're working on and what problems they are struggling with.
• Put the meetings on the calendar
• Regular status meetings give the PM the opportunity to:
• Increase team cohesion
• Keep the internal team informed about project developments from sources external to the team
• Identify potential problems and share solutions
• Ensure that the team understands the progress of the project and works together to determine any changes to the project plan
• Make sure the entire team shares the responsibility of meeting all the project objectives
• Guidelines for running the project status meeting are as follow:
• Be prepared. Everyone attending the meeting needs to have an open task report (OTR) before the meeting begins. An OTR is a subset of the project plan listing any tasks that should have been completed but weren't, plus the tasks scheduled for the next two reporting periods.
• Include part-time team members who have been working on project tasks or will be working on them in the next two weeks.
• Use the meeting to disseminate decisions make by management or customers, and pass on any positive feedback from these stakeholders.
• Using the OTR get the status of every task that should have been started or completed since the last status meeting.
• Leverage whole team presence by considering action on any problems. If special action needs to be taken, write it down and add a task to the project plan or an action to the issues log. 
• Every action should have a due date and person responsible for its completion.
• Don't try to solve problems that are too big for the meeting or that don't include everyone present
• Review readiness for future tasks on the OTR
• Review project logs including issue logs and the risk log
• Face-to-face status meetings are best, but for a geographically dispersed team this is not possible. In that case, more formality is required to ensure all the issues are raised and everyone is heard. 
• OTR provides this structure.
• Authorization - team members need to know about the decisions made by customers, sponsors and management in order to keep all project decisions synchronized
• The best way to communicate difficulties to customers and managers is to simply present them with the facts.
• Change management process has two parts
• the steps leading up to the initial approval of the product
• the process for controlling changes to that product
• Preset change thresholds automatically escalate the change management responsibility to an appropriate level. These thresholds include:
• Lowest threshold: changes the project team can approve; no impact to cost, schedule or the way the customer will use the product
• Middle threshold: changes that will affect cost, schedule or functionality; require more formal approval and are the domain of the change board up to predefined limits
• High threshold: changes that affect cost, schedule or functionality beyond the limits of change board approval; requires higher-level executives from customer and project organizations to be involved
• Who makes up the change board?
• Representatives from the project team
• The customer's representative
• Representatives from groups with related products
• Representatives from functional management
• The formal change management process guards against the anarchy of sudden change decisions and helps the PM manage expectations and preserve reputation
• Change management planning occurs during the project definition stage.
• Select the members of the change board and decide how often meetings will be held
• There are eight components to every change management process:
• Identification of deliverables
• Creation of the intermediate deliverables
• Stakeholder evaluation/modification
• Formal acceptance
• The recording of change requests
• Evaluation of requests and recommendations
• Ongoing stakeholder evaluation/modificaiton
• Formal acceptance
• The purpose of change management is to keep the overall cost-schedule-quality equilibrium realistic and desirable
• Closeout reporting

• This is most neglected project management activity, but it can bring a very high return to the project management organization.
• The deliverables from the project closeout serve two purposes:
• finalize the project in the eyes of the stakeholders
• learning opportunity
• Produce a lessons learned report
• The PM must plan for customer acceptance form the beginning and must be clear what from it will take and the work required to achieve it.

Chapter 10 Review

Building a High-Performance Project Team


Framework for building high-performance teams

• Positive team environment creates personal ownership and strong interpersonal relationships built on trust and respect. Creating this environment has four elements:
• Ground rules that describe work patterns and values of the team
• Prime the pump with a starting list of ground rules that can be completed by the group to elicit greater ownership
• A team identity built on commitment to a shared goal
• Communicate the goals and scope of the project
• Repeat, repeat, repeat (we learn through repetition)
• Establish the project's organizational alignment
• Demonstrate management support for the project
• Build team relationships based on understanding strengths and diversity
• The ability to listen
• Employ active listening
• Mitigate natural obstacles to listening, including: physical distractions, preconceived ideas about what the speaker is saying, confusing speech styles, mental noise from other problems
• Suspend judgment
• Once you have clearly understood the speaker, you are free to disagree
• Teach your team to listen
• Look for effective listening behaviors within the team, point them out and emphasize how they contributed to a better decision
• Add active listening to ground rules
• Active Listening Tips (Erik Van Slyke, 1999)
• Focus yourself physically, eliminate environmental distrations
• Use nonverbal cues such as nodding, eye contact and leaning forward
• Provide feedback such as paraphrasing to ensure that you understand what the speaker intended
• As relevant follow-up questions
• Listen for the idea behind the facts and data
• Suspend judgment and remain neutral in your responses until you understand
• Don't try to solve the problem or give advice until it is requested
• Don't judge what you are hearing either positive or negative
• Don't shift the attention to yourself
• Be aware of resistance and defensiveness from the speaker
• The ability to effectively manage meetings
• Effective Meeting Guidelines
• Before the meeting
• Send a meeting invitation specifying: purpose, planned start and finish, location, who will attend
• Send an agenda listing purpose and major topics of discussion with timeframe by topic and topic leader; frame each topic with a specific goal for the discussion
• During the meeting
• Start on time and reward promptness
• Review the process you expect to follow. Set ground rules and define how decisions will be made.
• Have a recorder tack decisions and key points leading to decisions (these become the meeting minutes)
• Use the agenda to structure the meeting
• Drive topics to resolution
• Facilitate the group and control involvement to encourage fair participation
• After the meeting
• Send out meeting minutes
• Collaborative problem solving can be built by focusing on four team abilities:
• Problem solving skills tied to an accepted problem solving process
• Problem Analysis Steps
• Identify the problem
• Find the source of the problem
• Set solution requirements
• Generate possible alternative solutions to the problem
• Select an alternative
• Perform risk and cost-benefit analysis on the selected option
• Make a decision and action plan
• Understanding and applying multiple decision modes, these include:
• Consensus
• Guidelines for Building a Consensus Decison
• Follow a structure problem solving process
• Manage group participation
• Embrace conflict as a sing of creative thinking
• Build consensus by integrating multiple viewpoints
• Know how you'll make the final decision (if consensus fails)
• Voting
• Delegating
• Autocratic
• Conflict resolution skills
• View conflict as a source of positive creative energy and apply these guidelines:
• Prevent the conflict by attending to the components of a high-performance team
• Acknowledge the conflict and focus on the problem rather than the people
• Frame the conflict in reference to the project
• Focus on interests, not positions
• Trade places, attempt to describe the situation from the other person's perspective
• Separate identifying and selecting alternatives
• Agree on process, not outcome
• Continuous learning
• Project managers can speed up team learning by: (Amy Edmondson, October 2001)
• Being accessible
• Asking for input
• Recognizing the need to learn
• Serving as a model
• Enlisting full participation
• Eliminating fear
• Recognizing success
• Continuous learning habits include:
• Actively identify and question assumptions
• Strive for honesty over conformance
• Make learning a conscious goal on an ongoing basis
• Be disciplined in creativity
• Question the project's goal, scope, and plan
• Leadership includes the following responsibilities relative to creating a high-performance project team
• Attend to the health of the team and its members
• Maintain the strategic vision
• Attend to team members
• Exhibit and demand accountability
• Display personal energy that inspires the team through example
• Stages of team development  (Bruce Tuckman, 1965)
• Forming: members are polite and avoid conflict; leader should respond to group uncertainty by providing structure and clear direction
• Storming: power struggles emerge as team gains clarity about goals and roles; leader should respond to chaos with structure and clear direction, recognize early accomplishments, facilitate group discussion, demonstrate effective listening, ensure equitable participation
• Norming: team members begin to trust each other, rules have become internalized; leader should delegate increase authority to team, build momentum by reviewing and improving team processes
• Performing: personal relationships are strong enabling high trust, team handles challenges with ease and is highly productive; team practically manages itself, leader should focus on removing obstacles and improving team processes, share leadership more widely with team
• Adjourning: closure rituals enable team to say goodbye; leader should facilitate closure by setting up opportunities to review team's performance
• Team Process Assessments can be used to identify what's working and what can be improved
• Decide on a feedback tool
• Set a timetable
• Evaluate the tool
• Take concrete actions based on the feedback

Chapter 9 Review

Balancing the Trade-off among Cost, Schedule, and Quality


The best predictor of project success is realistic stakeholder expectations. The PM must use definition and planning techniques to balanced the project scope against the three most common project constraints: time, money and resources.

There are three levels of balancing a project:

• Project: requires making changes that keep the project on track for its original cost, schedule and quality objectives. The PM should have the authority to make these decisions.
• Business case: if the project cannot achieve it's cost/schedule/quality goals then the business case for the project should be reexamined. Changing any of the project goals puts this decision beyond the authority of the project manager and team because:
• Cost goals are related to profitability goals
• Schedules are closely linked to the business case
• Changing features and performance level affects the quality and value of the end product
• Balancing the project to the business care requires agreement from all stakeholders, most of all those who will be affected by the changes
• Enterprise: the firm has to choose which projects to pursue. This is well beyond the authority of the PM and project team.

Techniques to balance at the project level  include:

• Reestimating the project. By checking your original assumptions in the statement of work and work package estimates, it is hoped that increase knowledge of the project will allow you to reduce pessimistic estimates. Make sure your estimating assumptions about productivity, availability of skilled people and complexity of tasks are consistent and match all available information. The second round of estimation should create a firmer foundation of facts supporting cost, schedule and resources estimates.
• Change the task assignments to take advantage of schedule float. This could reduce the schedule with no change in labor cost, however this may compromise efficiency on non-critical tasks. To be effective, the tasks must be of the same resource type, the noncritical task needs enough float to allow it to be delayed without delaying the whole project, and you must be able to reduce the duration of the critical path tasks by applying more people.
• Add more people to the project. Diminishing marginal returns predicts that this will work in most cases, but only so much, and this method requires qualified resources. Task independence is important to productivity from additional people...the more independent the task the more benefit to adding labor.
• Increase productivity by using experts from within the firm. Create an optimal mix of average and star players by making experts within the team by putting the same people on related tasks; and using the WBS, network diagram and work package estimates, identify the tasks that benefit most from top talent.
• Increase productivity by using experts from outside the firm. Don't let these experts become islands working alone, they should be integrated into the project team.
• Outsourcing the entire project or a significant portion of it. This moves a large portion of the work to experts who should be able to deliver with greater productivity and shortened schedule. However, shifting responsibility creates more risk as the PM will have less control and there will be less expertise inside your company at the end of the project than if it was done in-house. Also, finding qualified subcontractors for large projects is a major subproject in itself.
• Crashing the schedule. Reduce the duration of the critical path by identifying which tasks are least expensive to compress. It may throw off estimates. Maintaining a crash table (or a cost/schedule trade off table) will help to identify the path where the payback will be the greatest.
• Working overtime. Increasing the daily hours of the project team avoids the addition coordination and communication cost of adding more people. However, overtime costs more and there are many intangible costs and an increase in "undertime" to compensate.

Rebalancing at the business case level can be done by:

• Reducing the product scope
• Fixed-phase scheduling
• Fast-tracking
• Phased product delivery
• Do it twice - quickly and correctly
• Change the profit requirement

Balancing at the enterprise level mainly confronts the constraints of insufficient equipment, personnel and budget. Alternatives at the enterprise level are variations of the ones applied at the project and business case levels.

• Outsourcing
• Phased product delivery
• Shifting work to the customer
• Reducing product scope
• Using productivity tools

Chapter 8 Review

The Art and Science of Accurate Estimating


Project are unique and the more unique they are, the harder to accurately estimate. A new team with members unknown to the PM, new technologies on which the project is dependent, and incorrect timing predictions can all  impact the accuracy of an estimate. However there are some "classic" mistake we should take care to avoid:

• Don't make "ballpark" estimates when you're put on the spot. Instead refocus on the complexity of the estimating process and the desire to provide accurate information. If pressed, write down exactly what is being requested and start listing the questions that need to be answered before an accurate estimate can be produced.
• Don't confuse a bid with an estimate. A bid estimates the schedule and budget of a subcontractor with a tidy profit margin built in.
• Don't pad the estimate. Adding time and money to the estimate solely for the purpose of bringing the project in early and under budget unnecessarily ties up company resources and (if discovered) undermines the PM's reputation.

Estimating also have several "Golden Rules" that apply to all projects. These include:

• Have the right people make the estimates. Have people with experience with the work that is being estimated create the estimate. The people who will actually perform the work should also be involved in estimating it because people who have had a voice in estimating their own work are more motivated to achieve. Make sure the estimator understand the goals and techniques of estimating. PMs working independently never create accurate, useful estimation processes.
• Base the estimate on experience. Past performance data is critical to accurate estimation. Compariing actual performance to estimates is essential to refining the estimating model.
• Negotiate the equilibrium (cost-schedule-quality), not the estimate itself. As the estimate should be derived from the product specifications it is a more defensible stance to negotiate the equilibrium.
• It takes time and money to develop accurate estimates.

Estimates have three levels of accuracy that are used at different decision points in a project.

1. Idea evaluation or "ballpark estimate": can be off by as much as 90%, but are useful for initial sizing; the accuracy relies on the estimator's knowledge; the purpose is to determine whether it would be useful to invest in a more accurate estimate.
2. Project selection or order of magnitude (or "ROM" for Rough Order of Magnitude): has a wide variance but is based on extrapolations from other projects; similar to a ballpark estimate but includes a few hours of effort comparing the proposed project to past projects; acceptance of an ROM estimate may initiate a project (the PM will then be assigned and tasked with defining and planning the project and in so doing creating a more detailed estimate).
3. Detailed estimates (bottom-up estimates): include all schedule and resource information and a forecast of a project budget and cash flow; this estimate will be used to measure the project's success and is based on product specifications.

Phased estimating requires cost and schedule commitments for only one phase of the project at a time. The method recognizes that it is impractical to demand a complete estimate at the beginning of the product life cycle, instead breaking down the project into phases which are considered separately as projects. Phase gate development includes decision points at the conclusion of each subproject to determine whether the project will continue to the next phase given the additional information derived from the concluding phase.

Apportioning (or top-down estimating) assigns a total project estimate then assigns a percentage of that total to each of the phases and tasks of the project. Although this is rarely as accurate as bottom-up estimating, it can be useful in determining what projects to pursue. Making useful estimates in this way relies on:

• Historical projects that are very similar to the current project since the apportioning formula is derived from historical data.
• Accurate overall estimates since the pieces are a percentage of a designated total.

Parametric estimates use a basic unit of work to act as a multiplier to size the entire project. It is always based on historical data and requires the estimator to have a solid parametric formula. Parametric models can be used at either the project or task level; greater accuracy is achieved by first estimating low-level tasks using parametric models then combining these work packages to build a project or phase estimate; the variables in the parametric formula almost always require detailed product specifications.

Bottom-up estimating requires the most effort, but is also the most accurate. Detailed tasks are estimated and then "rolled up" to create a project or phase estimate. The accuracy of the entire model is dependent on the accuracy of the work package estimates. Bottom-up estimating works only to build the detailed phase estimates.

The detailed cost estimate becomes the standard for keeping costs in line, and forecasting cash flow enables the project's funding to be planned and available when needed. It is important to consider the following categories of costs when developing a detailed estimate:

1. Internal labor cost (people employed by the company)
2. Burdened labor rate (average cost of an employee including wages, benefits and overhead)
3. Internal equipment cost (special equipment that is not routinely available)
4. Expendable equipment (with consideration that it could be used on multiple project and may only be partially used up on this project)
5. External labor and equipment costs
6. Materials costs (these are estimated primarily from product specifications)

Chapter 7 Review

Realistic Scheduling


A realistic schedule includes a detailed knowledge of the work to be done, has task sequences in the correct order, accounts for external constraints, can be accomplished on time, and takes into consideration the objectives of the project.

A predecessor table and a network diagram are two ways of recording sequence constraints. Two rules when graphing task relationships with a network diagram: define task relationships only between work packages, and task relationships should reflect only sequence constraints between work packages, not resource constraints.

Milestones have zero duration, but are useful to mark significant events in the life of a project such as major progress points.

• Project start and finish milestones are useful anchors for the network.
• Milestones can be used to mark input from one party to another (aka external dependencies).
• Milestones can represent significant events that are not already represented by a work package or summary task.

The finish-to-start relationship indicates that one task must be completed before its successor can begin. This is the most common type of relationship. Start-to-start relationships allow the successor task to begin when its predecessor begins. Finish-to-finish tasks can start independently of each other.

Bottom-up estimating builds a cost and schedule estimate from the summation of cost and schedule estimates for each work package. Cost estimates come from three sources: labor estimates, equipment estimates, and materials estimates (materials costs should be estimated from product specifications, not bottom up estimates). These three cost sources can be replaced by fixed-cost bids.

Labor and duration are not always related in an intuitive way,  you need to consider productivity. Adding people to simple tasks always reduces the duration. However, for tasks involving knowledge workers, adding more workers does not always result in greater productivity or a shorter duration of the task. Also people who spend all their time on a project tend to be more productive than people who are spread across multiple projects.

Calculating an initial schedule is key to establishing realistic schedules and meeting them. It provides detailed schedule data for every work package including early start (earliest begin date for a task), early finish (earliest finish date), late start (latest date a task can start without delaying the project), late finish (the latest date a task can finish without delaying the project).  Calculating these dates is a three step process:

1. Forward Pass: works through the network diagram from start to finish to determine the early start and early finish for each task.
2. Backward Pass: works through the network diagram from finish to start to determine the late start and late finish dates for every task.
3. Calculate the float: determine which tasks have schedule flexibility and which define the critical path (the task progression that has zero or negative float and must be completed on schedule to keep the project on schedule). 

Gantt charts are the most common way to display a project schedule. The time scaled network can also be used when it is important to condense the network onto less paper. The completed initial schedule has not yet taken into account  people and equipment limitations which must be assigned and leveled. It is most productive to have consistent, continuous use of the fewest resources possible.

Resource leveling begins with the initial schedule and work package resource requirements then follows a four step process:

1. Forecast the resource requirements throughout the project for the initial schedule
2. Identify resource peaks
3. At each peak, delay noncritical tasks within their float
4. Eliminate the remaining peaks by reevaluating the work package estimates

If the resource leveled plan is unrealistic, the PM should restimate work packages and look at delaying tasks within their float to remove the worst resource peaks and valleys. Failing that the next option is to accept a later project completion date.