When third parties are required to carry out part of the work of a project it is essential to come to an understanding with them about the basis of their estimates. Remember that their estimate is probably a bid and includes contingencies and profit. Contingencies are discussed later, but always avoid including contin- gencies in your estimates. Clearly identify extra time that is added for holi- days, etc. However, if you are not careful people will add extra time and cost as a form of protection and argue that this can help bring in the project early and under budget. Ruthlessly strip such contingencies out of estimates. Padding estimates in this way can make an apparently good investment look like a bad investment or, if the work is approved, with- hold funding and approval from other potentially valuable projects. These problems should never occur if you have an active PST and adopt the principles and processes we have discussed in earlier chapters. THE GOLDEN RULES To minimize the probability of falling into the pitfalls pay particular atten- tion to the golden rules of estimating: • The individual doing the estimating must have a good understanding of the work he or she is estimating. • Anyone expected to be involved in actually doing the work must be involved in estimating the task durations. These are the only people who know their limitations (although they may not always admit to them) and they will clearly identify when there is a steep learning curve before output is matched to the schedule requirements. • Everyone involved in estimating must clearly understand the purpose and objectives of what they are doing and how to estimate effort and the size of the tasks. Only then will they produce estimates that will ultimately come true and avoid the mistake of predicting their best possible performance. EFFORT AND DURATION Fundamentally, an estimate is a decision about how much time and resource is required to carry out a piece of work to acceptable standards of performance. This requires you to determine: • The ‘size’ of the task or group of tasks, as determined from measure- ments if possible. Planning your project l 137 • The amount of ‘effort’ required to complete the work. How can the work be broken down? Can it be divided between two or more people? Effort is measured in project time units – hours, days or weeks. • The level of risk involved. Once the effort is known it is possible to optimize the resource needs, taking individual capacities or available time into account to determine the levels of effort required from each. Effort is a direct measure of a person’s time to do a piece of work in normal workdays. Unfortunately that person will often have other non- project activities to complete, which reduces his or her capacity to do the project work. At a capacity of 50 per cent the work will take at least double the estimated number of workdays. In practice it takes up to 20 per cent longer than this because of the ‘back-track’ effect due to the breaks in the continuity of the work. Effort is measurable as continuous work with no interruptions. Duration is a conversion of effort taking into account the number of people involved, their capacities and an allowance for non-productive time. It is often more convenient to use full-time equivalents (FTEs) in deriving how many people are needed for any part of a project. Since duration is measured in real working days this is never the same as the schedule, which has to take into account: • non-available days for project work; • non-working days – weekends; • public and organization holidays; • staff holidays. The first step for you is to derive some realistic durations and then apply these to a calendar to derive a schedule. 138 l The programme and project processes and techniques Figure 7.5 The relationship between effort, duration and schedule EFFORT DURATION SCHEDULE CALENDAR TIME SIZE EFFORT DURATION = WORK DAYS TASK 25 DON’T FORGET THE DATE ESTIMATING THE DURATIONS Of course everyone wants accurate estimates as the consequences of poor estimating are serious and expensive. However, it is not practical in most business environments to spend a lot of time in detailed planning and esti- mating to derive the initial business case we discussed in Chapter 5. But we do need the detail for the full plan development after PST approval. So we can really consider three levels of estimating, as described below. Idea evaluation – outline or order of magnitude estimate This is the estimating process to avoid if you can. Unfortunately there are usually more ideas seeking funding than funds available. The outline esti- mate is an expert appraisal of predicted cost of the whole project for presentation to the potential sponsor and seeks to pass through the initial screening process discussed in Chapter 3. To save time it is frequently based on past projects using a scale factor. The purpose of this estimate is only to allow an evaluation and a decision to be taken about progressing to a more detailed investigation of the potential project for submission to the PST. This allows the idea to pass through Phase Gate Zero. Accuracy: ± 35–50% Project selection – top–down estimate This estimate is used to prepare a proposal and business case for a proposed project to seek PST approval and pass through Phase Gate One. This type of estimate uses past experience of similar projects where avail- able and has the goal of estimating the time and cost of completing each key stage identified in the work breakdown structure for the proposed project. Here it is essential for the golden rules of estimating to be applied because you do not have the luxury of time to engage in detailed analysis of each key stage. The accuracy must be good enough to create confidence in preparing a full business case and high level schedule for presentation to the PST for approval. It is common for feasibility studies to include this level of estimating. Accuracy: ± 15–25% Project approved – detailed or bottom-up estimate Once a project has been approved and taken through the definition phase the PST makes a decision to open Phase Gate Two into the planning phase. Now the duration and effort for all the tasks in every key stage are anal- ysed in detail to derive accurate estimates for the schedule preparation. Planning your project l 139 This estimate is based on all available data and must use information on resource capacity and availability from organization resource mapping. Bottom-up estimating is the most time-consuming but also the most accurate form of estimating. The data for all the tasks can be rolled up for each key stage using the work breakdown structure, allowing the prepara- tion of the key stage cost data and the project budget. Accuracy: ± 5% Sources of data As the duration of each key stage is the real time it will take to complete the work this is usually the most difficult part of the planning process. Unfortunately there is an abundance of ‘good advice’ in most organiza- tions about how long a piece of work will or should take. The process appears to be part art and part science, which is hardly surprising since you are really trying to predict the future! So far no one has produced a reliable crystal ball! The sources for accurate estimates are limited. They are: • experience of others; • the expert view; • historical data from other projects. There is no substitute for experience. If similar work has been done before, you can ask others for their own experience and adjust the data for your project. It is a reasonable way to start but always take a cautious approach. Elegant technical tools such as Monte Carlo exist for estimating but they depend on a large database of information and are difficult to justify in many situations. The data you collect in this way will often hide important relevant infor- mation. No one will easily admit taking longer than the plan predicted for a piece of work – particularly if slippages caused problems. Also, people’s memories have a habit of only remembering the good news with the passage of time. If good plans and records exist review these to determine what actually happened compared to what was planned to happen. Take more than one opinion if you can and remember no two people ever do the same piece of work at the same pace. The equation relating effort and performance is different for us all. Who are the experts? There may be a few – or so they believe! Always ask questions about how reality compared with original estimates for some work. Check that the nature or content of the work did not change. You soon discover who is above average at estimating accurately – these individuals are the experts you desperately seek. Since it is relatively rare 140 l The programme and project processes and techniques for work to be identical between different projects, apply your adjusting factor to arrive at a realistic duration for each of the activities. Keep a record of how you derived the estimates in case you are wrong, then you can improve your estimating skills. People problems Ask anyone how long a piece of work will take and you are likely to be given a shrug and a smile and a wildly inaccurate answer. This is because people do not ask themselves some simple questions: • Do I really understand what is involved? • Do I have all the necessary skills and tools for the work? • What else must I do at the same time? • What is the priority of the project work compared with other work? • When is the project work really needed by? • Can I break the job down into chunks to do at different times? • Can I predict what I will be doing when this project work needs to be done? • Will I be taking any holiday during the time concerned? • Do I have any other obligatory commitments during the time concerned? • What does my manager know about my future commitments that I do not know yet? The reality is that the majority of people are not productive 100 per cent of the time! As much as 20 per cent of people’s working week is taken up by: • meetings – particularly ones they need not attend; • general interruptions: – visits to desk and others – wanderlust; – equipment failure; – reading journals and e-mail; – searching for information; – giving support and advice to others; • commitments to routine functional work and other projects; • unforeseen events; • seeking advice from others; • communication failures; • personal organization; • engaging in conflict; • inability to say ‘No’ to others’ requests. Planning your project l 141 Consider also: • project complexity: – specifications: adequacy, unfamiliarity; – new quality standards; – unclear understanding of the technology; – new technology, which always has a learning curve for confi- dence; • team size and location of the team members; • anything else you can think of. The answers to the questions above and other similar questions are often ignored in deriving an initial estimate, leading to considerable problems later. Rash promises are assumed as realistic and inserted into the plan. CONTINGENCIES The purpose of contingencies is to attempt to quantify the extent of uncer- tainty in the estimating process that makes up the project plans. Contingencies are not intended to cover changes to the project definition or objec- tives after they have been agreed with the stakeholders nor are they intended to cover estimating errors or tasks not included originally. If such changes occur then the contingencies are rolled forward and adjusted. Ask: • What factor can you use for adjusting people’s estimates? • Is that factor global for all estimates or different for different types of work and for different people? • Should you expose your adjustment factors? • What limits must you use in applying contingency? • Should you multiply some estimates by an additional weighting for: – team size; – team experience (in individuals); – team-working history of this team; – project complexity; – project use of new techniques or technology? • If you think you should apply an additional weighting, what should it be? Use the answers to these questions to revise the base estimates. A scope contingency may be required if there is uncertainty about the detail of some parts of the plan. The scope contingency is only used when you as the project manager specifically authorize its use through the change manage- ment process. Remember that you must have clearly delegated authority to use the contingency. 142 l The programme and project processes and techniques You take the final decision about the durations entered into the plan to calculate the total project time with a projected completion date. Obviously there is a balance between the desired project completion date and the projected or forecast completion date based only on estimates. The former may well appear to be almost impossible and quite unrealistic, the latter insupportable and good justification for cancelling the project! Somewhere in the middle there is an acceptable solution. Always record any assumptions you have made in deriving the durations. Phased estimating Phased estimating is frequently quoted as the best way to manage a project as it demands cost and schedule commitments only for one phase at a time. The method is popular with project managers because it allows flexibility and obviously it reduces the problems of estimating the future before the current situation is resolved. It does limit the information and clarity of total project cost and schedule time for successful completion and stakeholders are frequently unhappy about this lack of commitment. You must break the project down into ‘phases’ that are really sub- projects and these are each planned in detail with accurate estimates. At the end of the set of sub-projects the outputs are used as inputs to the next ‘phase’ or set of sub-projects that are then subject to detailed planning. This can lead to a stop–go situation with considerable uncertainty about resource availability and capacity and an unknown project completion date – potentially the endless project! The phase gate approach recommended in this book allows you to esti- mate in detail at the key stage level and confidently derive a detailed schedule for total project cost and time computation. The detail that needs to be exposed within each key stage is derived and validated as you move through the project work. As issues arise and are resolved the impact on the schedule can be readily evaluated with appropriate corrective action agreed and undertaken. The whole process has visibility to the stakehold- ers and significant changes can be proposed and agreed in the full under- standing of the impact on completion date and objectives. TIME-LIMITED SCHEDULNG AND ESTIMATES There is always a conflict when a completion date is imposed on a project before any work on estimates is carried out. This imposed date is completely outside your control so you attempt to compress estimates to fit the plan. To a limited degree this process is acceptable, in that it gives a target, but too often it moves you into a totally unreal situation where you are faced with ‘mission impossible’. Apart from the complexity of the work Planning your project l 143 impacting the time element you have to make huge assumptions about resource availability. You must still prepare realistic estimates to derive a clear case and state: • what you can deliver in the time; • what you cannot deliver in the time; • why you can only meet part of the objectives of the project. You can then use your skill as a negotiator to arrive at an agreed solution! Practical estimating Since the major portion of all project costs is frequently the time expended, the accuracy of estimates is a key factor in achieving project success. Historical data, even from parts of previous projects, can be valuable as an initial guide. Analysis of the actual proposed work is essential if accurate estimates are to be derived. Even then people seem to habitually underes- timate time for execution of work. There are some people who have an intuitive ability to visualize the work involved and give accurate estimates – identify these people and make good use of them! Some practical guidelines that can be used are as follows: • Schedule full-time team members at 3.5–4.0 working (productive) days per week (to allow for holidays, absences, training courses, etc). • Include management time where appropriate as an additional 10 per cent. • In planning, avoid splitting tasks between individuals. • When tasks are split between two individuals do not reduce time by 50 per cent – allow time for communication and co-ordination. • Take individual experience and ability into account. • Allow time for cross-functional data transfer and responses. • Build in time for unscheduled urgent tasks arising on other non- project activities. • Build in spare time for problem solving and project meetings. • Include appropriate contingencies at all levels of planning. Any estimate is only as good as the data upon which it is based so, like project risks, accept that the estimate may change with time as more data becomes available to you. As the project continues always review and vali- date the durations you have used. For each key stage keep a record of: • the estimates you have finally decided; • any assumptions made during estimating; • where contingencies have been added; • how much contingency has been added. 144 l The programme and project processes and techniques Now, with durations agreed, you can analyse the logic diagram for its critical path. IDENTIFYING THE CRITICAL PATH OF YOUR PROJECT Critical path techniques have been in use on projects now for some 30 years, having proved their value as a tool for project scheduling and control. The fundamental purpose is to enable you to find the shortest possible time in which to complete your project. You can do this by inspec- tion of the logic diagram. Enter the durations on to your Post-it notes in the logic diagram for each key stage. Begin at the START note and trace each possible route or path through the diagram to the FINISH note, adding the durations of all the key stages in the path. The path that has the highest number – that is, the longest duration – is the critical path of your project and represents the shortest time in which it is possible to complete the project. All other paths are shorter. All the key stages on the critical path must, by definition, finish on time or the project schedule will slip. For example: referring to the previous logic diagram (Figure 7.6), the available paths are: 1. Start – planning – design phase 1 – purchase orders – install – testing – finish: 37 days. 2. Start – planning – design phase 1 – design phase 2 – install – testing – finish: 42 days. 3. Start – planning – design phase 1 – train staff – testing – finish: 36 days. 4. Start – client survey – design phase 1 – purchase orders – install – testing – finish: 56 days. 5. Start – client survey – design phase 1 – design phase 2 – install – testing – finish: 61 days. 6. Start – client survey – design phase 1 – train staff – testing – finish: 46 days. 7. Start – client survey – training design – train staff – testing – finish: 42 days. So, the critical path is number 5 in the list of available paths. This is where reality hits you – is the project total time what your customer actually requires? If it is a long way out, do not worry yet, as most project managers expect this to happen. Remember, your estimates are based on people’s perceptions. Your job is to attempt to compress the time to a schedule that, on the one hand, is real and achievable and, on the other, satisfies your customer. To do this you need to make use of another Planning your project l 145 valuable tool of project management: Programme Review and Evaluation Technique (PERT). This tool allows you to analyse the logic diagram to confirm: • the critical path – confirmation of your inspection; • the start and finish times of all the key stages; • the amount of ‘spare time’ available in the non-critical key stages. All these data are very useful to you for optimizing the project schedule and, more importantly, for the control of the project work once this starts. THE PROGRAMME EVALUATION AND REVIEW TECHNIQUE The PERT method of critical path planning and scheduling is the most commonly used technique for project management control. It is based on representing the activities in a project by boxes (or nodes) that contain essential information calculated about the project. The interdependencies between the activities are represented by arrows to show the flow of the project through its various paths in the logic diagram. The PERT diagram (sometimes referred to as a network) is identical to the logic diagram you derived earlier, each Post-it note for a key stage representing a node. The conventional data stored in the node box are as shown in Figure 7.7. The four corners of the node box are used to store the four characteristic 146 l The programme and project processes and techniques planning 5 days design phase 1 9 days purchase days design phase 2 25days install 5 days testing 7 days Finish 0 days train staff 15days design training 5 days client survey 15days Start 0 days orders 20 design training 5 days Figure 7.6 The logic diagram with durations inserted. Note: durations are in consistent units [...]... critical path and the total float available in the tasks Some of these tasks may be assigned milestone status later This enables you to produce a Gantt chart for each key stage As the project continues, you develop a complete family of such charts that are all expanded views of the primary or overall key stage Gantt chart In this way, a detailed plan of the work for a particular part of the project. .. PREDECESSOR ACTIVITY OF ‘AB’ AND ‘AC’ S F S AB S F AF F AA S F S F ‘AD’ IS THE SUCCESSOR ACTIVITY OF ‘AB’ AND ‘AC’ ‘3’ LAG AC AD ‘4’ LEAD S F AE S F AG RELATIONSHIPS RELATIONSHIPS ‘FINISH -TO- START’ AA MUST FINISH BEFORE AB AND AC CAN START ‘START -TO- START’ T AE MUST START BEFORE AG CAN START (AG is free start as soon a s AE starts) free to as AE starts) ’ ‘FINISH -TO- FINISH’ AF MUST FINISH BEFORE AD CAN FINISH... on the right-hand end, ie at the finish end of the bar When you initially draw any Gantt chart the float is always drawn at this end The limit of float is the limit of the time available if the schedule is not to be threatened and, possibly, the whole 150 l The programme and project processes and techniques STEP 1 Decide the time each activity or key stage will take and enter these DURATIONS on to the. .. to read and understand Planning your project l 149 ANALYSING THE LOGIC DIAGRAM The analysis of the diagram is a simple logical process extending the initial calculation you made earlier to locate the critical path Two steps are involved: 1) adding durations from start to finish – the forward pass; 2) subtracting the durations from finish to start – the backward pass Figures 7.9–7.11 illustrate the. .. As you can see, the calculations involve only some simple arithmetic and you can easily carry out the analysis on the actual Post-it notes you used to derive the logic diagram In this way you and your team can quickly calculate the total project time and find those areas of the project where float time exists USING THE PERT ANALYSIS DATA At this point in the planning process you may be looking at a. .. FINISH (AD can onlyfinish AFTER AF has finished) only finish ‘LAG’ AD CAN START 3 DAYS AFTER AC IS FINISHED (an intentional intentional delay o f 3 days before AD starts) of 3 days before AD starts) ‘LEAD’ AY AE CAN START 4 DAYS BEFORE AC FINISHES (an intentional sta rt of AE by 4 days) intentional early start of AE by 4 days) Figure 7.8 Relationships in the PERT diagram You can impose a forced delay using... a graphic display on which each key stage is represented by a rectangle All the rectangles are located on a timescaled grid to show their position in the schedule It is useful to have both a project timescale bar and a calendar timescale bar across the top of the chart This allows you to include the non-working days such as weekends and holidays The key stages are listed on the left-hand side by convention,... clearly defined by the people doing the work, and it minimizes misunderstandings about responsibility At the same time, these people can confirm: • • • that the work can realistically be completed on time; resource capacity and availability; the commitment of the line manager(s) to providing resources You now have the data to update the WBS However, another advantage of this method is that the detailed... you have enough of the right skills available, and the non-critical key stages must have sufficient float available to allow you to reduce their float times Always ensure you do not use more than 60 per cent of available float in this activity The reduction in schedule time is a trade-off against increased cost, and if this is not too significant, it may be acceptable to your customer and sponsor However,... expediting and purchasing administration; training; inter-site travel and communication; updating project file records Suggest that each key stage owner draws up a complete list of tasks, and then produces a responsibility chart for each key stage Then he or she can estimate the durations of all the tasks in the key stage using the same techniques as before With the key stage owner, identify the actual people . (an intentional early start of AE by 4 days) ‘AA’ IS THE PREDECESSOR ACTIVITY OF ‘AB’ AND ‘AC’ ‘AA’ IS THE PREDECESSOR ACTIVITY OF ‘AB’ AND ‘AC’ ‘AD’ IS THE SUCCESSOR ACTIVITY OF ‘AB’ AND ‘AC’ F S AF T ’ AY ANALYSING. diagram RELATIONSHIPS S F F S F S ‘3’ LAG ‘4’ LEAD S F AA AC F S AE AB AD ‘AA’ IS THE PREDECESSOR ACTIVITY OF ‘AB’ AND ‘AC’ ‘AD’ IS THE SUCCESSOR ACTIVITY OF ‘AB’ AND ‘AC’ F S AF F S AG RELATIONSHIPS ‘FINISH -TO- START’ AA MUST. that, on the one hand, is real and achievable and, on the other, satisfies your customer. To do this you need to make use of another Planning your project l 145 valuable tool of project management: