Download Realistic Time Estimating, gien Uncertainty

19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
IMPLEMENTATION PLANNING
& SCHEDULING
Estimating Activity Times,
& Ultimately Project Duration
© 2010, Dr. Kenneth F. Smith, PMP
1
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Activity Time Estimating
& Project Scheduling
A “CRITICAL” Problem
At a recent (Feb 2010) Project Management Institute
Chapter Meeting in Honolulu, member-participants
identified their Major Concern was the difficulty of
developing realistic time estimates
Realistic Scheduling is particularly critical for
•
Contractors with Firm Fixed Price (FFP) Contracts
•
Clients/Donors awarding Cost Plus Fixed or
Incentive Fee (CPFF & CPIF) -type Contracts.
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© 2010, Dr. Kenneth F. Smith, PMP
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Project Activity Duration Estimating
& Scheduling
Experienced Project Managers unanimously
acknowledged that Time estimates were typically
Over-optimistic for one or more principal reasons:
CLIENT DRIVEN The Client establishes the project
completion deadline before technical analysis,
consultation or project management feedback
CONTRACTOR RESPONSE In order to be “Fully
Responsive” Contractors (Project Managers) accept
the Client’s deadline to hopefully win the contract
© 2010, Dr. Kenneth F. Smith, PMP
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Project Activity Duration Estimating
& Scheduling
After technical analysis Contractors either
• Arbitrarily “Cut and Paste” activity time
•
estimates to fit the Client’s pre-determined
schedule.
Use the standard “PERT 3 time estimating
method” but tend to favor the “Optimistic
Time” over the Most Likely Time in “Cutting
and Pasting” their final schedule proposal.
CONTRACTOR IMPLEMENTATION experience is
that even the “Most Likely Time” is usually overoptimistic & unrealistic!
© 2010, Dr. Kenneth F. Smith, PMP
4
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Project Activity Duration Estimating
& Scheduling
REMEDY
CONTRACTOR RESPONSE: Contractors (Project Managers)
•
Conduct the Technical Analysis using a supplement to the PERT
3-time estimating approach that improves the probability of
developing a more realistic time estimate
•
Provide feedback to the Client ASAP -- Brief the Client to
demonstrate why their deadline is unrealistic, and appeal for
duration extension, or reduction in Scope of Work before submitting
a bid
•
If Client insists on the Original Project Completion Deadline
&/or Scope, either
•
•
Get a change order ASAP if you are the successful bidder
Don’t Bid and consider yourself lucky you won’t have to deal
with the time, cost & quality problems that will inevitably arise!
© 2010, Dr. Kenneth F. Smith, PMP
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Who Provides the Best
Estimates?
© 2010, Dr. Kenneth F. Smith, PMP
•
•
•
Those who know
the work
Those who are
accountable for
the work
Those who do
the work
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Parametric Modeling
© 2010, Dr. Kenneth F. Smith, PMP
Parametric modeling
uses project
characteristics
(parameters) in a
mathematical model to
predict project costs.
Example:
In construction, the
per square meter of
living space is often
used to estimate cost.
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Definitive (Bottom Up)
85k
Overseas Trip
Preparation
10k
50k
Accommodation
/ Booking
Travel
Documents
3k
7k
Passport
© 2010, Dr. Kenneth F. Smith, PMP
25k
Visa
Personal
Belongings
10k
15k
Clothing
30k
Plane Ticket
Other Items
20k
Hotel
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Estimating Project Duration is not
Easy
•
•
•
•
•
Time/Cost/Quality affect each other
Estimating Methods affect accuracy
Estimating as Accurately as possible is important
How much detail do you need?
 Top Down
 Bottom up
In the Real World, Estimates and Actuals are usually different
-- which results in continuous adjustments to the schedule.
© 2010, Dr. Kenneth F. Smith, PMP
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© 2010, Dr. Kenneth F. Smith, PMP
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
10
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
RISK QUANTIFICATION
© 2010, Dr. Kenneth F. Smith, PMP
Determining
Risk Events &
Risk Tolerance
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Program Evaluation & Review
Technique (PERT)
te = O + 4M + P
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A 3-time probability-based time
estimating technique often
used to estimate activity &
project duration when there is
uncertainty with individual
activity time duration estimates
i.e. a Weighted Average
or “Mean”
of the range of
possibilities
© 2010, Dr. Kenneth F. Smith, PMP
12
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
PERT Method – Activity Duration
Estimate
Formula:
Optimistic + (4 x Most Likely) + Pessimistic
6
Example:
Optimistic time is 10 weeks
Pessimistic time is 35 weeks
Most likely time is 15 weeks
10+(4x15)+35 = 10+60+35 =
6
6
105
6
te = 17.5 weeks, or 18 weeks (rounded up)
Expected Time
© 2010, Dr. Kenneth F. Smith, PMP
13
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
The “PERT” Formula
A Fundamental Flaw & Caution
Using the PERT formula to estimate
activity duration, the probability
for completing the Activity on time
is only 50%
In other words, at the outset, the
Project Activity duration is underestimated at least half of the time,
so will most likely be overrun.
© 2010, Dr. Kenneth F. Smith, PMP
14
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Russian Roulette “RR”
Project Managers who
use the Standard PERT
3-Time Formula to
Estimate Activity timing
run a high risk of
committing Suicide . . .
Even Worse than
Playing
RUSSIAN ROULETTE !!!
© 2010, Dr. Kenneth F. Smith, PMP
15
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Russian Roulette “RR”
•
•
•
•
What is the Probability of
Surviving “RR” with One Round
in a Six Cylinder Chamber
Revolver?
Point the Gun at Your Head
Spin the Chamber
Pull the Trigger
Probability of being killed is
1 / 6 = 17 %
Thus Probability of Surviving =
100% - Probability of Dying =
83%
© 2010, Dr. Kenneth F. Smith, PMP
16
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Russian Roulette “RR”
And the Probability of
Surviving with:
Three Rounds in the
Chamber
= 3 / 6 = 50 %
(i.e. the same odds as
the weightedaverage PERT
3 time formula)
© 2010, Dr. Kenneth F. Smith, PMP
17
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Would you play Russian
Roulette with One bullet?
Then Why play Project
Management with the
“PERT 3 Time Formula”
the equivalent of Russian
Roulette with Three bullets?
© 2010, Dr. Kenneth F. Smith, PMP
18
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
PERT Formula — A Work-Around Solution
Ken Smith’s “Realistic Time” Strategy
1. Use the PERT 3 time formula during the
planning stage as the first step in estimating
individual activity durations
2. Then add two standard deviations to the
activity duration
This will readjust the likelihood of completing
the activity scheduled time to 95%
© 2010, Dr. Kenneth F. Smith, PMP
19
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Basic PERT/CPM Formula
Activity te = opt + 4 ML + pess
6
Activity Estimated =
Standard Deviation
© 2010, Dr. Kenneth F. Smith, PMP
pess - opt
6
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19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
NORMAL CURVE, RANGE, STANDARD DEVIATION,
and RELATED PROBABILITIES
MEAN
0.13%
-3
-2
2.15%
13.54%
-1
34.13%
-1 SD
-2SD
-3SD
0%
© 2010, Dr. Kenneth F. Smith, PMP
+1
34.13%
+1 SD
X
68.26%
95.44%
+2
+3
13.5%
2.15%
0.13%
+2SD
+3SD
99.74%
95%
50%
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100%
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Realistic Activity Time
Ken Smith’s prescription for
improving activity duration
estimates, & Project
Scheduling
ter = opt + 4 ML + pess + 2 Std. Devs
© 2010, Dr. Kenneth F. Smith, PMP
6
22
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
Realistic Time Example
Optimistic Time = 3 ; Most Likely = 7 ; Pessimistic = 23
PERT te = 3 + 4(7) + 23 / 6
=
(3 + 28 + 23) / 6 = 54 / 6 =
9
One Estimated Standard Deviation (ESD) =
[23 – 3] / 6 = 3.3
So Two ESDs = 3.3 x 2 = 6.6
THUS the “Realistic Activity Time” (with a 95%
probability of attainment) = 9 + 6.6 = 15.6, or
16 rounded
© 2010, Dr. Kenneth F. Smith, PMP
23
19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand
Project Management in the GMS Learning Program
A NOTE ON PROBABILITY
• A Risk Event could still occur
Despite a Low Probability
and
• A Risk Event might not occur
Despite a High Probability
There are No Guarantees !!!
© 2010, Dr. Kenneth F. Smith, PMP
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