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Estimating Activity Times, & Ultimately Project Duration

Estimating Activity Times, & Ultimately Project Duration. IMPLEMENTATION PLANNING & SCHEDULING. Activity Time Estimating & Project Scheduling A “CRITICAL” Problem.

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Estimating Activity Times, & Ultimately Project Duration

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  1. Estimating Activity Times,& Ultimately Project Duration IMPLEMENTATION PLANNING & SCHEDULING

  2. Activity Time Estimating& Project SchedulingA “CRITICAL” Problem At a recent (Feb 2010) Project Management Institute Chapter Meeting in Honolulu, member-participants identified their Major Concernwas the difficulty of developing realistic time estimates Realistic Scheduling is particularly critical for • Contractorswith Firm Fixed Price (FFP) Contracts • Clients/Donors awarding Cost Plus Fixed or Incentive Fee (CPFF & CPIF) -type Contracts.

  3. Project Activity Duration Estimating& Scheduling Experienced Project Managers unanimously acknowledged that Time estimates were typically Over-optimistic for one or more principal reasons: CLIENT DRIVENThe Client establishes the project completion deadline before technical analysis, consultation or project management feedback CONTRACTOR RESPONSEIn order to be “Fully Responsive” Contractors (Project Managers) accept the Client’s deadline to hopefully win the contract

  4. Project Activity Duration Estimating& Scheduling After technical analysisContractors 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 over-optimistic & unrealistic!

  5. 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!

  6. Who Provides the Best Estimates? • Those who know the work • Those who are accountable for the work • Those who do the work

  7. 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.

  8. Definitive (Bottom Up)

  9. 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.

  10. RISK QUANTIFICATION Determining Risk Events & Risk Tolerance

  11. Program Evaluation & Review Technique (PERT) 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 te= O + 4M + P 6 i.e. a Weighted Average or “Mean” of the range of possibilities

  12. 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 = 105 6 6 6 te= 17.5 weeks, or 18 weeks (rounded up) Expected Time

  13. 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 under-estimated at least half of the time, so will most likely be overrun.

  14. 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 !!!

  15. 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%

  16. Russian Roulette “RR” And the Probability of Surviving with: Three Rounds in the Chamber = 3 / 6 = 50 % (i.e. the same odds as the weighted-average PERT 3 time formula)

  17. 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?

  18. PERT Formula — A Work-Around Solution Ken Smith’s “Realistic Time” Strategy • Use the PERT 3 time formula during the planning stage as the first step in estimating individual activity durations • Then add two standard deviations to the activity duration This will readjust the likelihood of completing the activity scheduled time to 95%

  19. Basic PERT/CPM Formula Activity te = opt + 4 ML + pess 6 pess - opt Activity Estimated = Standard Deviation 6

  20. NORMAL CURVE, RANGE, STANDARD DEVIATION, and RELATED PROBABILITIES MEAN -3 -2 -1 +1 +2 +3 0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13% -1 SD +1 SD X 68.26% -2SD +2SD 95.44% -3SD +3SD 99.74% 95% 0 % 100% 50%

  21. Ken Smith’s prescription for improving activity duration estimates, & Project Scheduling Realistic Activity Time ter = opt + 4 ML + pess+ 2 Std. Devs 6

  22. 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

  23. 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 !!!

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