Putting the Project Pieces Together

Estimating Training

Agenda Items
Estimating

Introduction Tools and Techniques Overview Rough-Order-of Magnitude (ROM) Estimates Intermediate Estimates. Definitive Estimates. Help and References Additional Questions

Training Goals
To understand Estimating Tools and Techniques. To learn enough about the various methods to use them effectively. To know where you can access more information and supporting materials.

Estimating Introduction
What is an estimate?
An approximate judgment or opinion regarding the value, amount, size, weight, timing, etc.

Based on documented assumptions.

There are three primary estimating techniques/types used by OIS.

OIS Primary Estimating Types

Rough-Order-of-Magnitude (ROM) Estimates ( + - 50%) Intermediate Estimates (+ or 30%) Definitive Estimates (+ or 20%)

One technique or all may be used on a project.

Rough-order-of-magnitude (ROM) Approach

What is it?
An estimate obtained based on very limited data. Consider to have + or 50% accuracy range. Usually the first estimate developed or requested. Supplies a range of values rather than a single estimate.

Rough-Order-of-Magnitude --When is it Appropriate?

Three Key Questions:

What is the Purpose of the estimate? How precise of an estimate do I NEED? How much time do I have?

ROM Estimating Techniques

Parametric Estimating - uses a statistical relationships

Analogous Estimating - Using actual or historical data, a form of expert judgment.

--Both can be used with a limited amount of information

Parametric Estimating
What do I need to do a Parametric Estimate?

Initial business and technical complexity score.

ROM

Parametric Estimating Spreadsheet.

ROM Parametric Estimating Spreadsheet

Parametric Estimating Steps

How do I do a Parametric Estimate? 1. Complete the Business and Technical Complexity Assessment tool. 2. Enter results in ROM Parametric Estimating Spreadsheet. 3. Make adjustments to estimate.

Analogous Estimating
What do I need to do a Analogous Estimate?

A recognized group of technologists and estimating experts.

The product description or Product Charter.

Analogous Estimating Steps

How do I do an Analogous Estimate?
1. 2. 3. 4. 5. Identify similar projects or activities. Obtain actuals or historical data. How much did the similar project or activities cost? Re-evaluate and document the similarities and differences. Apply expert judgment and decide on estimate. Document the estimate and estimating assumptions.

Do NOT use Rough-Order-of Magnitude

When a precise or high level of confidence in an estimate is needed!

Intermediate Approach
What is it?
Used in support of a preliminary plan, a partial plan, or a plan that does not require precise estimating. Considered to be within + or 30% accuracy. Often developed to support the project plan in the early phases of the project.

IntermediateWhen should I use it?

Four Key Questions:

What is the purpose of the estimate? When is an estimate needed for the project? What level of precision is needed? What is the estimate intended to cover?

Intermediate Estimating Techniques

Parametric Estimating
An estimating technique that uses a statistical relationship between data and other variables to calculate an estimate. A Mathematical model. (Percentage Based Estimating.)

--Both require a lower level of detail about the project to be defined.

Delphi Estimating
The Delphi estimating technique uses a group of subject matter experts who develop estimates independently, discuss differences and assumptions, and go through one or more revision cycles, until a single estimates is agreed upon.

Parametric Estimating (Intermediate)

What do I need to do an Intermediate Parametric Estimate? Detailed Estimates of an early phase.
Intermediate

Parametric Estimating Spreadsheet.

Intermediate Sample Project Percentages

Parametric Estimating - Sample Project Percentages
Planning Execution Requirements Definition Design Construction Test Implementation Controlling Closing Total 10% 16% 22% 16% 15% 8% 3% 100% 79% 10%

Parametric Estimating Steps

How do I do a Parametric Estimate? 1. Adjust the recommended work effort percentages 2. Enter the total known dollar and duration estimates for the early sub-phase.

Delphi Estimating
What do I need to do a Delphi Estimate?

A Group of SMEs

The product description and Work Breakdown Structure

Estimating

Facilitator

Delphi Estimating Steps

How do I do a Delphi Estimate?
1. Gather written estimates from the experts for each item in the WBS Poll group and write estimate on a flipchart or whiteboard (no discussion). If estimates are the same, go to next item estimated and repeat this step. Discuss differences and assumptions. Rethink if necessary Review/revise estimates. Continue step 2-4 until consensus is reached.

2. 3. 4. 5.

Consensus
--Consensus means either each estimator strongly agrees with the estimate or can live with it. --Consensus is not reached if an estimator strongly disagrees with the estimate.

Definitive Approach
What is it?
Used to develop the precise estimates needed to tactically manage and complete a project. Considered to have a + or 20% accuracy. The most accurate estimate for the amount of work and resources. The estimate the organization will commit to for the project baseline.

Definitive Estimate --When is it Appropriate?

When the project needs to commit to an estimate that is likely to be within + or 20%? Enough information has been obtained by the project to accurately estimate what it will take to complete the project. The organization can wait for a precise estimate to be formed.

Definitive Estimating Techniques

Forecasting

Requires a strong historical base

Triangulation Range PERT (Recommended Approach)

--Variations on the use of three estimates, most optimistic, most likely and most pessimistic to determine a single estimate.

PERT Estimating
What is a PERT Estimate?
Program Evaluation Review Technique
Uses optimistic, pessimistic, and most likely estimates.

Most likely estimate is weighted more heavily

PERT Estimating
Other Facts
-- One single estimate is not always accurate and by using three estimates, risk factors can be incorporated. --Using identified risks to estimate: Most pessimistic (many risk will occur) + most likely (weighted average number of risks will occur) + most optimistic (few risks will occur)/6 = The Single, most accurate estimate. Estimate = Pessimistic + (4 x Likely) + Optimistic / 6

What do I need to do a PERT?

WBS PERT Analysis Formula Sources for estimates

PERT Estimating-Prerequisites

PERT Estimating Steps

What steps do I use?
1. Ascertain the most optimistic, most likely and most pessimistic estimates. 2. Use the PERT formula to calculate a single estimate. 3. Apply the single estimate to each item in the WBS.

Wrap It Up!

Help and References

Available on the PMO Web site or in hardcopy

Project Management Process Guide Estimating Templates Estimating Examples Estimating Technique - Assessment http://www.dhs.state.or.us/admin/pmo/ hardcopy binder of materials email Sanford.Kahn@state.or.us phone - 378-2101 x 236

Contact the PMO for assistance

Additional Questions

Please take some time for Class Evaluation!