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How many times have you been handed a
project to manage and you look at the price and cost estimates with
shock like some fool pulled them out of the air? If you're
like me, probably quite a few times in your career!When I seen
an under-estimated project I always think
"What jerk came up with these numbers?" No wonder 70%
of information technology projects fail. To quote one
politician, "Surely we can do better."
To do so, we need to understand a few
human frailities facing the project management community:
- Basing projects on
thin-air price and cost estimates usually
results when someone makes a proposal without following
the basics of project cost estimating, commonly called "PERT estimating".
- These thin-air price and cost
estimates, hallmarks of a bad estimate and reflective of poor
executive skills, cause two other problems called:
- "Change-ordering your client
to death"
- "Running the a** off your
labor."
- The first problem may end up in
a terminated project or client relationship--I saw this happen
with my own eyes when I was on a CIO staff at a $180M
company. A Fortune 500 company providing
information technology services played this game and
was not given more work for that very reason--stated pointedly
to them in a meeting.
- The second problem, named
after an exact quote from someone guilty of not
using PERT estimating techniques, may eventually end up
in a lawsuit if a current legal trend continues where
professionals are challenging the traditional idea of
uncompensated overtime (see this article on
HumanResources.com). (It may also drive up your
staff turnover during good economic
times.)
So how as project managers who
practice in a professional manner can we prevent these
problems? By applying the practice of PERT
estimating.
PERT estimating is the Program Evaluation and
Review Technique (PERT) which creates estimates of the weighted
average duration of tasks. NOTE: Keep in mind that PERT itself is seldom used today
although PERT-like estimates are often used in Critical Path CPM
calculations. *
For a quick refresher,
the PERT Equation
is: *
(Optimistic
Estimate + (4 times Most Likely Estimate) + Pessimistic
Estimate)
divided by
6
*
source: Project
Management Body of Knowledge text, page 68, para 6.4.2.2 and PMBOK
text, Figure 6-4)
Here's an example:
If you
were installing a new web portal infrastructure, you might have a
task to make sure that portal is secure from hackers. Your
problem is estimating the duration to complete the task called
"conduct security testing and resolve any findings on a ten-server
Solaris cluster".
You or
your system architect determine:
-
At
best, you need 24 man-hours
-
Most likely you need 36
man-hours
-
And if everything goes wrong,
you need 51 man-hours
Your
PERT estimating equation for that task would be:
(24 + 4(36) + 51)/6 =
36.5
Your
weighted average is 36.5 hours to complete that task activity.
Of course, you still need to figure out what sort of skills you need
to perform each of those man-hours on this task activity, but that's
a resource management issue rather than an estimating
concern.
SPECIAL NOTE FOR PMP
EXAM CANDIDATES:
The idea of PERT, but not the equation, is on the PMP
examination test. The
key knowledge items are:
PERT uses weighted average duration estimates, PERT isn’t
used much anymore, but PERT-like estimates (such as the above use)
are used often in CPM calculations. Of course, if you don't
understand the equation and how it is used, you have no IDEA what
PERT estimating means and you're probably pulling numbers out of
thin air!
End
of lesson--click here to download a copy of my PERT Estimating study
aid!
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