estimating activity times, & ultimately project duration

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© 2010, Dr. Kenneth F. Smith, PMP

Estimating Activity Times,& Ultimately Project

Duration

IMPLEMENTATION PLANNING & SCHEDULING

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At a recent (Feb 2010) Project Management Institute At a recent (Feb 2010) Project Management Institute Chapter Meeting in Honolulu, member-participants Chapter Meeting in Honolulu, member-participants identified their identified their Major Concern was the difficulty was the difficulty of developing of developing realistic time estimates

Realistic Scheduling is particularly critical for Realistic Scheduling is particularly critical for

• Contractors with Firm Fixed Price (FFP) Contracts Firm Fixed Price (FFP) Contracts

• Clients/Donors awarding Cost Plus Fixed or Cost Plus Fixed or Incentive Fee (CPFF & CPIF) -type Contracts.Incentive Fee (CPFF & CPIF) -type Contracts.

Activity Time Estimating& Project Scheduling

A “CRITICAL” Problem

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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 beforebefore 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

Project Activity Duration Estimating& Scheduling

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After technical analysisAfter technical analysis ContractorsContractors either either• ArbitrarilyArbitrarily “Cut and Paste” activity time

estimates to fit the Client’s pre-determined schedule.

• Use the standard “PERT 3 time estimating Use the standard “PERT 3 time estimating methodmethod”” but tend to favor the ““Optimistic Optimistic TimeTime”” over the Most Likely Time in “Cutting and Pasting” their final schedule proposal.

CONTRACTOR IMPLEMENTATION experience is that even the “Most Likely Time”“Most Likely Time” is usually over-optimistic & unrealistic!


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REMEDYREMEDY

CONTRACTOR RESPONSE: ContractorsCONTRACTOR RESPONSE: Contractors (Project Managers) (Project Managers)

• Conduct the Technical AnalysisConduct the Technical Analysis using using a a supplementsupplement to the to the PERT 3-time estimating approachPERT 3-time estimating approach that improves the probability of that improves the probability of developing a more realistic time estimatedeveloping a more realistic time estimate

• Provide feedback to the Client ASAPProvide feedback to the Client ASAP -- Brief the Client to -- Brief the Client to demonstrate why their deadline is unrealisticdemonstrate why their deadline is unrealistic, and appeal for , and appeal for duration extension, or reduction in Scope of Work before submitting duration extension, or reduction in Scope of Work before submitting a bida bid

• If Client insists on the Original Project Completion Deadline If Client insists on the Original Project Completion Deadline &/or Scope, either&/or Scope, either

• Get a change order ASAPGet a change order ASAP if you are the successful bidder if you are the successful bidder

• Don’t Bid Don’t Bid and consider yourself lucky you won’t have to deal and consider yourself lucky you won’t have to deal with the time, cost & quality problems that will inevitably arise!with the time, cost & quality problems that will inevitably arise!


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Who Provides the Best Estimates?

• Those who know the work

• Those who are accountable for the work

• Those who do the work

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Parametric Modeling

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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Overseas Trip Preparation

Accommodation / Booking

Travel Documents

Personal Belongings

Passport Visa Clothing Other Items

Plane Ticket Hotel

85k

10k 50k 25k

3k 7k 10k

30k 20k

15k

Definitive (Bottom Up)

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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.

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RISK QUANTIFICATION

Determining

Risk Events &

Risk Tolerance

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Program Evaluation & Review Technique (PERT)

A 3-time A 3-time probability-basedprobability-based time time estimating technique often estimating technique often used to estimate activity & used to estimate activity & project duration when there is project duration when there is uncertainty with individual uncertainty with individual activity time duration estimatesactivity time duration estimates

te = O + 4M + P

6i.e. a Weighted Average

or “Mean”

of the range of possibilities

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PERT Method – Activity Duration Estimate

Formula:Optimistic + (4 x Most Likely) + PessimisticOptimistic + (4 x Most Likely) + Pessimistic

66Example:

Optimistic time is 10 weeksPessimistic time is 35 weeksMost likely time is 15 weeks

10+(4x15)+35 = 10+60+35 = 105 6 6 6

te = 17.5 weeks, or 18 weeks (rounded up) = 17.5 weeks, or 18 weeks (rounded up)

Expected TimeExpected Time

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The “PERT” Formula A Fundamental Flaw & Caution

Using the PERT formula to estimate activity duration, the probability the probability for completing the Activity on time for completing the Activity on time is only 50%is only 50%

In other words, at the outset, the Project Activity duration is under-under-estimated at least half of the timeestimated at least half of the time, so will most likely be overrun.

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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 Even Worse Worse than than PlayingPlaying

RUSSIAN ROULETTE !!!RUSSIAN ROULETTE !!!

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What is the Probability of SurvivingSurviving “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 isProbability of being killed is 1 / 6 = 17 %1 / 6 = 17 %

Thus Probability of SurvivingSurviving = 100% - Probability of Dying = 83%83%

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And the Probability of Surviving with:Three RoundsThree Rounds in the Chamber

= = 3 / 6 = 50 %3 / 6 = 50 %(i.e. the same odds as

the weighted-average PERT

3 time formula)

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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?

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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 deviationsadd two standard deviations to the activity duration

This will readjust the likelihood of completing the activity scheduled time to 95%95%

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Basic PERT/CPM Formula

Activity te = Activity te = opt + 4 ML + pess opt + 4 ML + pess 66

Activity Estimated Activity Estimated = = Standard DeviationStandard Deviation

pess - optpess - opt66

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NORMAL CURVE, RANGE, STANDARD DEVIATION,and RELATED PROBABILITIES

XX-1 SD +1 SD-1 SD +1 SD

-2SD +-2SD +2SD2SD

-3SD +3SD-3SD +3SD

68.26%68.26%

95.44%95.44%

99.74%99.74%

50%50%

-3 -2 -1 +1 +2 +3 -3 -2 -1 +1 +2 +3

0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13% 0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13%

MEANMEAN

0 %0 % 100%100% 95%95%

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Ken Smith’s prescription for improving activity duration

estimates, & Project Scheduling

teterr = = opt + 4 ML + pessopt + 4 ML + pess + 2 Std. Devs+ 2 Std. Devs66

Realistic Activity TimeRealistic Activity Time

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Realistic Time Example

Optimistic TimeOptimistic Time = = 33 ; ; Most LikelyMost Likely = = 7 7 ; ; PessimisticPessimistic = = 2323

PERT te = 33 + 4(7) + 23 / 6 =

One Estimated Standard Deviation (ESD) = [23 – 3] / 6 = 3.33.3

So Two ESDs = 3.3 x 2 = 6.66.6THUS the “Realistic Activity Time” (with a 95% probability of attainment) = 9 + 6.6 = 15.6, or 16 rounded

(3 + 28 + 23) / 6 = 54 / 6 = 99

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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 !!!