the five time-tested keys of...

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The Five Time-tested Keys of Estimating

that Successful PMs Can't Live Without!

GR8PM

Traditional Agile Hybrid Training � Coaching � Consulting

Copyright, GR8PM, 2013, all rights reserved.

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What can you expect from this training? !   Proven Ideas and Clear Principles. !   Practicality over Theoretical Purity. !   Plenty of Time for Questions!

Five Keys to Estimating Introduction

Purpose and limits of this training? !  Transfer as much knowledge as possible. !   Identify valuable sources of information. !  Accept we can’t cover everything in detail in

only 1 hour!

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Introduction: John Stenbeck, PMP, CSM, CSP, PMI-ACP

!   Sr. PM Consultant for client-side ERP implementations

!  Experience in Accounting, IT, Aerospace, Construction, and Manufacturing

!  Train technical professionals in Aerospace, Defense, High Technology, Financial Services, Bio-medical and Life-science fields

!  Adjunct instructor at the University of California San Diego (UCSD)

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Introduction: John Stenbeck, PMP, CSM, CSP, PMI-ACP

!   Featured speaker at HP’s National Conference (2002), Oracle’s Annual Conference (2003), and PeopleSoft’s International Conference (2004).

!  One project reached the Federal Supreme Court. !   Front page feature in the San Diego Union and

LA Times; Guest on Oprah and the Today Show. !   Past President and VP of Prof. Dev. for PMI-SD

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GR8PM Introduction: !   PMP® and PMI-ACP® Exam Prep classes !   Scrum Master Certification classes !  Corporate On-site seminars:

!   Command Course in Agile Project Management !   Project Management Boot Camp !   Crash Course in Leadership !   Masters Course in Estimating and Risk Management

!  Organizational Support Services: !   Agile Enterprise Roll-out Consulting !   Contract Project Managers

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GR8PM Introduction: Partial List of Past Clients !   Booz Allen Hamilton, Inc., McLean, VA

!   Guinness Bass Import Company, Greenwich, CT

!   Lucent Technologies – Bell Labs, Allentown, PA

!   Nike Corp., Beaverton, OR

!   Oracle Corp., Redwood Shores, CA

!   Orange County Public Works, Orange, CA

!   Qualcomm Inc., San Diego, CA

!   U.S. Army – Space & Terrestrial Comms., Fort Monmouth, NJ

!   U.S.D.A. – National Finance Center, New Orleans, LA

!   Visa – Smart Cards, Foster City, CA

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Five Keys to Estimating:

Key #1 – The Law of Imprecision

GR8PM


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TIM

E COST

QUALITY

PMBOK® Guide, Third Edition

Cost

Scope

Qualit

y

Customer Satisfaction

Risk Ti

me

PMBOK® Guide, Fourth Edition

Iron Triangle transformed into Hell-of-a-Hexagon From Three to Fifteen Interrelationships.

Five Keys to Estimating Key #1 – The Law of Imprecision

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Why must estimates be imprecise?


“It is better to be roughly right than precisely wrong.” John Maynard Keynes

Value

100% 80% 60% 40% 20% 0%

TIME

Accuracy

Accuracy vs. Value vs. Time

Cost

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!   Fundamental Premise of Planning

% Design Estimate Estimate Types Complete Accuracy ROM 0 – 10 % +100% to – 50% Budget 15 – 25 % +30% to – 15% Definitive 45 – 100 % +15% to – 5%


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TIME: T T+30 T+60 T+90 T+120 T+180

WORK

ESTIMATE (BUDGET)

FORECAST (ROM)

!  Cost-effective Planning Despite Uncertainty


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Why do imprecise estimates?


A little effort helps a lot! But a lot more doesn’t.

EFFORT

AC

CU

RA

CY

Value

80%

10 Hours

90%

50 Hours

Planning ROI: Is it 5 : 1 10 : 1 15 : 1 or ??

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Key #2 – Estimating is hard.

GR8PM


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Exercise: !   Form a 3-person team. !   Identify the #1 risk that every project faces.

Five Keys to Estimating Key #2 – Estimating is Hard

Answer: !  There is nothing more expensive than building

(and selling!) the wrong product!!

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PROBLEMS

SOLUTIONS

CONE OF UNCERTAINTY

!  What is the challenge of estimating?


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CONE OF UNCERTAINTY PROBLEMS

SOLUTIONS

!  How is estimating improved?


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CONE OF UNCERTAINTY

TRADITIONAL PROJECT MANAGEMENT 4 WEEK CYCLE-TIME 3WEEK CYCLE-TIME 2 WEEK CYCLE-TIME

!  What does Agile contribute?


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FEATURE USAGE

Feature Usage reported by Jim Johnson, Chairman, Standish Group International, Inc., XP2002 Conference, Sardinia, Italy

!  How is the Cone of Uncertainty narrowed?


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It is not about the “Unknown Unknowns”


As we know, there are known knowns. The things we know we know.

We also know, there are known unknowns. That is to say, we know there are things we do not know.

But there are also unknown unknowns, the things we don't know that we don't know. Donald Rumsfeld, Feb. 12, 2002, DOD news briefing

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Three Key Questions: !   What is the purpose of the estimate? !   How precise of an estimate do I really need? !   How much time do I have?


Best Practices: !   Obtain historical data for similar projects. !   Evaluate similarities and differences. !   Apply expert judgment. !   Document the estimate and assumptions.

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Key #3 – Use the right tools.

GR8PM


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Traditional: Graphical WBS

Objective

Phase 1 Phase 2

Work Package 1

Work Package 2

Work Package 1

Work Package 2

Activity 1 Activity 2 Activity 3

Task 1 Task 2 Task 3

Agile / Scrum: Feature Structure

Product

Theme 1 Theme 2

Epic 1 Epic 2 Epic 3 Epic 4

Story 1

Story 2

Story 3

Task 1 Task 2 Task 3

DETAILS

Few & Broad

Many & Specific

Five Keys to Estimating Key #3 – Use the right tools

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Roadmap – 1 Year (Sr. Mgt.)

Release #1 – 4 Months Release #2 – 4 Months Release #3– 4 Months Feature

#1 Feature

#2 Feature

#3 Feature

#4 Feature

#5 Feature

#6 Feature

#7 Feature

#8 Feature

#9 Feature

#10 Feature

#11 Feature

#12

BACKLOG: Stories

#1 thru #n

Feature #1

Feature #2

Feature #3

Feature #4

Feature #5

Feature #6

Rolling Wave – 6 Months


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Capacity Analysis !   6 Developers x 3 wks. x 4 Iterations = 72 weeks !   72 wks. x 60% efficiency = 43 weeks !   43 weeks = Planning Limit


!   Stories are: !   Extra Small (XS) = 1 week to complete !   Small (S) = 2 weeks !   Medium (M) = 3 weeks !   Large (L) = 5 weeks !   Extra Large (XL) = 8 weeks

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Smaller

XL L M S XS

Larger

PRIO

RIT

Y

HIGH

LOW

1 8 5 5 2

2 3

3 2

2 3

3 5

Iteration #1 = 44 days

1

1

8

8 5

5 5 2 3

5

Iteration #2 = 43 days

8 8

8 5

2 3 3 5 Iteration

#3 = 45 days

8 5 5 2 3 Iteration

#4 = 23days


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Release #1 – 4 Months

Iteration #1 – 4 Weeks Iteration #2 – 4 Weeks Iteration #3– 4 Weeks Iteration #4– 4 Weeks

Stories Stories Stories Stories Stories Stories Stories Stories Stories Stories Stories Stories

Iteration #1 DEFINITIVE ESTIMATE



Iteration #4 PLANNING POKER


Release #2 – 4 Months

Iteration #5 – 4 Weeks Iteration #6 – 4 Weeks Iteration #7– 4 Weeks Iteration #8– 4 Weeks

Stories Stories Stories Feature Feature Feature Feature Feature Feature Stories Stories Stories



Iteration #7 AFFINITY ESTIMATES

Iteration #8 AFFINITY ESTIMATES

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Key #4 – Measure early and often.

GR8PM


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Tracking Systems

Five Keys to Estimating Key #4 – Measure early and often

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Typical Burndown Report


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Measurement: Velocity Charts

Sprint

90 80 70 60 50 40 30 20

Story Po

ints Com

pleted

1 10 9 5 6 7 8 2 3 4

Best 3: 67

Avg. 10: 54

Worst 3: 44


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Measurement: Velocity Forecasts

Sprints Remaining

Story Po

ints Rem

aining

11 15 16 17 12 13 14

Mean (Worst 3):

44

Mean (Avg. 10):

54

Mean (Best 3):

67


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Wor

k C

ompl

eted

Days

Baseline; Planned Value

1 2 3 4 15 5 6 7 8 9 10 11 12 13 14

Actual Cost

Stories Completed Earned Value

Earned Value

Stories Completed

Actual Cost

EVM & Burn-up Chart


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Key #5 – Progress = ƒ (Difficulty / Work Velocity)

GR8PM


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Logic Network Diagrams

What is the Logic Network when you get a flat tire?

STOP REMOVE

REPLACE GO

F

S

Five Keys to Estimating Key #5 – Progress = ƒ (Difficulty / Work Velocity

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Increase sophistication of Critical Path Method (CPM).

STOP REMOVE

REPLACE GO

F

S

EARLY STARTDATE DURATION EARLY FINISH

DATE

ACTIVITYNAME or ID

ACTIVITY OWNERPLANNED COST

COST TO CRASHMINIMUM TIME

LATE FINISHFLOATLATE START

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Applying the PERT kernel.

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To estimate the duration of highly-complex or unknown tasks

use the formula:

The PERT Kernel

LOEe = (Oe + 4MLe + Pe) ÷ 6

The key is in explaining expectations to the estimator!!

Where: LOEe = Level-of-Effort Estimate. Oe = Optimistic Estimate. MLe = Most Likely Estimate. Pe = Pessimistic Estimate.

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The Five Keys

!   1 – The Law of Imprecision !   2 – Estimating is hard !   3 – Use the right tools !   4 – Measure early and often !   5 – Progress = ƒ (Difficulty / Work Velocity

Five Keys to Estimating Summary

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Five Keys to Estimating

GR8PM


Please feel free to contact me or get LinkedIn. jstenbeck @ gr8pm.com

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