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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. 2 © 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 3 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 5 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 6 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. 7 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 8 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 9 © 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 11 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 6 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 20 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% 21 100% 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 24