estimating & control - reliable estimates for realistic projects - pmi nl chapter
DESCRIPTION
IT projects have a large rate of failure. This is partly due to the unstable environment an IT project has to operate in, partly due to bad management, but mainly due to the fact that projects start with an unrealistic estimate and has to live up to impossible expectations. The “Basis of Estimate” is a good framework to establish the completeness of an estimate and to control the progress. To create a reliable estimate for a realistic project the right basis must be selected for design, sizing, effort, planning and cost. How can we select the right experience data to make realistic predictions for a new IT project.TRANSCRIPT
Estimating & Control Reliable Estimates for Realistic Projects
Frank Vogelezang Manager Pricing Office
2 Agenda Estimating IT projects
Estimating . . Off track?
On track with a track record
Keep track
Introduction Frank Vogelezang 3
Pricing Office
Functional Size - NESMA FPA - COSMIC
Estimating . . Off track? Why is IT so difficult to create reliable estimates
IT has a bad track-record in project estimating Estimating . . Off track?
5
For a critical analysis of the Chaos reports see: www.cs.vu.nl/~x/chaos
IT has a bad track-record in project estimating Estimating . . Off track?
Any idea where this bad track-record comes from?
No clear project objective
Start with an inadequate budget
Too little time and/or resources
No use of benchmarking
No idea what an estimate is
6
We can double the estimate . . . . but then it will
ultimately be four
times as expensive!
on estimating
A typical IT estimate Estimating . . Off track?
7 P
rob
abili
ty
Schedule / Cost
50/50 median result
First likely option
Estimating on track Start on track and stay on track by building a track record
On track or off track Keep track of your portfolio
9
www.itdashboard.gov
-15% on $5.3 Billion
+31% on $461 Million
Benchmarking as reality check Does it fit my historical track record?
10
Paul Masson’s Law
Parkinson’s Law
Brooks’ Law
Minimal time
Optimal effort
Time
Effo
rt /
Co
st
Realistic Productivity
A bad estimate is the start of a troubled project Recommended practices as an external track record
11
RE
CO
MM
EN
DE
D P
RA
CT
ICE
Estimation
purpose
Engagement
Scope
Description
Estimating
methodology
(FP, expert,
etc.)
Estimate
Classification
(1,2,3,4,5)
Design Basis
(Components
lists, units, etc.)
Sizing Basis
Requirements
Functional
technical
Effort Basis
delivery
constraints,
service levels
Planning Basis
Working time
standby
Cost Basis
methods and
sources , units
Assumptions
internal,
external
Allowances
Not in the Basis
Exclusions
No costs
included for…
Exceptions
anomalies or
variances on
standard
Risks and
Opportunities
assumptions
Containments
cost elements
for mitigation
Contingencies
Uncertainty,
unforeseeable
elements
Management
Reserve
changes in
scope, effort
Reconciliation
Changes to
previous
estimation
Benchmarking
Comparisons to
similar
engagements
Estimate
Quality
Assurance
Reviews
Attachments
Level of detail
Stage, Deal
size/type, fixed
price/TM
Attachments Attachments Attachments
Keep track From a reliable estimate to a realistic project result
13 Keep track Actuals versus plan
Schedule Variance
Time Variance
Cost Variance Budget Variance
Actual cost Earned value
14 Keep track Forecast based on actuals
Schedule Slippage
Cost Overrun
Actual cost Earned value Total cost (forecast) Total value (planned)
15 Keep track The whole picture
Budget Variance
Schedule Slippage
Schedule Variance
Time Variance
Cost Variance
Cost Overrun
Actual cost Earned value Total cost (forecast) Total value (planned)
16 Keep track with Estimating & Control Reliable estimates and realistic projects
Estimate & Plan
Create a baseline estimate
Develop a Project Plan
Monitor and Control
Document actuals
Create forecast based on actuals
Re-estimate and establish new baseline
Measure and Analyse
Establish variances for the whole project
Determine experience data parameters
Incorporate this knowledge in future estimates and plans
Estimate &
Plan
Baseline(s) vs Final Actuals
Experience & Knowledge
Measure &
Analyse
Monitor &
Control
17
WatKostIT.blogspot.nl
ThePriceofIT.blogspot.com
@FrankVogelezang
FrankVogelezang
www.linkedin.com/in/frankvogelezang
Basis of Estimate for IT Services New standard practice by NESMA and AACEi
18
RE
CO
MM
EN
DE
D P
RA
CT
ICE
Estimation
purpose
Engagement
Scope
Description
Estimating
methodology
(FP, expert,
etc.)
Estimate
Classification
(1,2,3,4,5)
Design Basis
(Components
lists, units, etc.)
Sizing Basis
Requirements
Functional
technical
Effort Basis
delivery
constraints,
service levels
Planning Basis
Working time
standby
Cost Basis
methods and
sources , units
Assumptions
internal,
external
Allowances
Not in the Basis
Exclusions
No costs
included for…
Exceptions
anomalies or
variances on
standard
Risks and
Opportunities
assumptions
Containments
cost elements
for mitigation
Contingencies
Uncertainty,
unforeseeable
elements
Management
Reserve
changes in
scope, effort
Reconciliation
Changes to
previous
estimation
Benchmarking
Comparisons to
similar
engagements
Level of detail
Stage, Deal
size/type, fixed
price/TM
Estimate
Quality
Assurance
Reviews
Attachments Attachments Attachments Attachments
Row 1 – General aspects Basis of Estimate for IT Services
19
Estimation
purpose
Engagement
Scope
Description
Estimating
methodology
(FP, expert,
etc.)
Estimate
Classification
(1,2,3,4,5)
Level of detail
Stage, Deal
size/type, fixed
price/TM
Purpose
Engagement Scope Description Decomposes the solution into its constituent elements
Estimating methodology Is the estimate functional size based, expert based, analogy based, process metrics based, parametric based
Estimate Classification From detailed fixed-price estimates (1) to the first screening of ideas (5)
Level of detail The lower the classifiction, the more details are needed
RE
CO
MM
EN
DE
D P
RA
CT
ICE
Row 2 – Basis Basis of Estimate for IT Services
20
Design Basis
(Components
lists, units, etc.)
Sizing Basis
Requirements
Functional
technical
Effort Basis
delivery
constraints,
service levels
Planning Basis
Working time
standby
Cost Basis
methods and
sources , units
Design Basis Process or architectural documents that describe the project
Sizing Basis Units used to express the project in product quantities
Effort Basis Methods (and tools) used to convert size into effort
Planning Basis Activities, Milestones and Constraints
Cost Basis Methods and sources used for determining all unit, effort, subcontract,
material and expenditures cost
RE
CO
MM
EN
DE
D P
RA
CT
ICE
Row 3 – Risks Basis of Estimate for IT Services
21
Assumptions
internal,
external
Allowances
Not in the Basis
Exclusions
No costs
included for…
Exceptions
anomalies or
variances on
standard
Risks and
Opportunities
assumptions
Allowances
Assumptions
Exclusions What is nót part of the estimate
Exceptions Anomalies or variances to standard estimating practices
Risks and Opportunities High risk or opportunity related to cost, duration, quality and/or safety R
EC
OM
ME
ND
ED
PR
AC
TIC
E
Row 4 – Mitigation Basis of Estimate for IT Services
22
Containments
cost elements
for mitigation
Contingencies
Uncertainty,
unforeseeable
elements
Management
Reserve
changes in
scope, effort
Reconciliation
Changes to
previous
estimation
Benchmarking
Comparisons to
similar
engagements
Containments Measures included to prevent and/or mitigate the identified risks
Contingencies
Management Reserve
Reconciliation major differences between the new
or re-baselined estimate and the last published estimate
Benchmarking comparisons of overall estimate metrics, ratios, and factors with similar
engagements, historical data, and industry data
RE
CO
MM
EN
DE
D P
RA
CT
ICE
Row 5 – Quality Basis of Estimate for IT Services
23
Estimate
Quality
Assurance
Reviews
Attachments Attachments Attachments Attachments
Documentation of the QA on the Estimate
Estimate Deliverables Checklist
Reference Documents sizing report, requirements, designs, texts, notes, specifications
Additional Attachments (optional) reconciliation report, benchmarking report, risk analysis report
RE
CO
MM
EN
DE
D P
RA
CT
ICE