Transcript Slide 1

Practice Standard for Project Estimating
Session #
Kerry R. Wills, Chris Richards
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Historical Examples of Projects
Bellagio Hotel
• 1996 estimated at US
$1.2B
• Final cost was US $1.4B
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©2010Permission is granted to PMI for PMI® Marketplace use only
Historical Examples of Projects
B2 Bomber
• 1986 estimated at US
$437M
• 1994 cost was US $2.2B
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©2010Permission is granted to PMI for PMI® Marketplace use only
Historical Examples of Projects
Mars Rover
• Estimated at US $1.6B
• Final cost is over US $2B
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©2010Permission is granted to PMI for PMI® Marketplace use only
Historical Examples of Projects
Sidney Opera House
• Estimated at US $7M
• Final cost was US $102M
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©2010Permission is granted to PMI for PMI® Marketplace use only
Historical Examples of Projects
Panama Canal
• Estimated at over US $400M
• Came in one year ahead of
schedule and US $23M under
budget
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©2010Permission is granted to PMI for PMI® Marketplace use only
Agenda of Session
• Standard Overview
• Content Overview
• Questions
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©2010Permission is granted to PMI for PMI® Marketplace use only
Introduction
• Creating a Practice
Standard for Estimating
• ~50 pages
• Set foundation and
framework
• Broad and not deep
• Scope derived through
analysis and feedback
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Guiding Principles
• Environment and context
• What estimates are and are not
• Responsibility at different levels
• The process of estimating
• Defining assumptions and constraints
• Highlighting techniques
• Key considerations4
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©2010Permission is granted to PMI for PMI® Marketplace use only
Target Audience
• Project Managers
• Members of a Project Management Office
• Project Sponsors
• Educators / Trainers
• Consultants
• Human Resource Managers
• Senior Management
• Individuals interested in project management
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©2010Permission is granted to PMI for PMI® Marketplace use only
A Different Approach
Prior
Current
• Large teams
• Focused team
• Slow and cumbersome
• Clear vision
• Low participation
• SME reviews (individual/org)
• Managing team
• Iterative
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©2010Permission is granted to PMI for PMI® Marketplace use only
The Team
Core Team
Project Manager
• Chris Richards, PMP
Content Lead
• Kerry Wills, PMP
Editor/Review Lead
• Linda Zupan, PMP
Deputy Project Manager
• Judi Vincent, PMP
Volunteer Lead
• Paula Varas, PMP
Communications Lead
• Cindy Berg, PMP
Extended Team
Writer/ Practitioners
• Barbara Fuller
• Parviz Rad
• Clifford Sprague
Editor/Researchers
• Puja Kassariya
• Mary Kosovich
• Antonio Quiroz Magan
• Mercedes Martinez Sanz
• Pam Taupier
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©2010Permission is granted to PMI for PMI® Marketplace use only
The Team
Subject Matter Experts
•
•
•
•
•
•
•
•
8 PMI SIGs
International Society of Parametric Estimators
Microsoft
Mechanical Contractors of America,
Canadian Institute of Quantity Surveyors,
American Society of Professional Estimators,
Mechanical Contractors of Canada,
Over 20 industry SMEs including Max Wideman, Lee Lambert
and Carl Pritchard
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Timeline
The Practice Standard for Project Estimating Phase 2 High Level Timeline
Jan 2009
PM/DPM
Meeting to
present
findings
Loss of PM
March 2009
April 2009
May 2009
June 2009
23 March-
22 April-
05 May-
13 June-
Phase 2
Charter
Signed
Draft
Annotated
Outline and
Project Plan
Due to MAG
for Review
Update and
Finalize
Annotated
Outline and
Project Plan
as needed
Face to
Face Core
Team
Meeting
26 MarchJudi Vincent
move to
DPM Role
26 MarchKerry Wills
moved from
Deputy
Content to
Content
Lead
20 MayBegin Draft
of Standard
Content
October 2009
Nov-Dec 2009
17 Oct-16
Nov
17 Nov- 16
Dec-
Core team
makes final
preparation
of draft for
Committee
draft review
(SME/ PSPE
Volunteers
team)
Committee
draft review
(SME/ PSPE
Volunteers
team)
16 Dec-
Feb 2010
March 2010
14 Feb-
14 Feb-
Committee
draft update
complete.
Draft provide
to MAG for
review and
approval
PMI posts
Exposure
Draft on
PMI.org for
review
Committee
Draft
Comment
review by
core team.
Comments
informally
adjudicated,
draft
updated to
reflect
changes
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Timeline
The Practice Standard for Project Estimating Phase 2 2010 Timeline
May 2010
July 2010
Aug 2010
Sept 2010
15 May- 13
July
14 July- 27
July
11 Aug- 31
Aug
1 Sept- 30
Sept
Exposure
Draft
Adjudicated
by the
Adjudication
team
Appeals
PMI Final
Edit
Consensus
Body
Balloting
28 July- 10
AugAppeals
Adjudication
Oct 2010
1 Oct
CEO
Approval
02 Oct- 01
Dec
Standard is
prepared for
Publication
Dec 2010
01
December
Practice
Standard
for Project
Estimating
Published
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Agenda of Session
• Standard Overview
• Content Overview
• Questions
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©2010Permission is granted to PMI for PMI® Marketplace use only
An Estimation Case Study
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Content Approach
• “Living” Life Cycle
• Standard is organized around phases
• Key concepts and principles
• Additional considerations
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Outline
• Chapter 1: Introduction
• Chapter 2: Principles and Concepts
• Chapter 3: Prepare to Estimate
• Chapter 4: Create Estimates
• Chapter 5: Manage Estimates
• Chapter 6: Improve the Estimating Process
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch1: Introduction
• 1.1 Purpose of Practice Standard for Project Estimating
• 1.2 Concept / What is Project Estimating?
– Cost, resources and duration
• 1.3 Estimating and the Project Management practice
• 1.4 Relationship between this Standard and other PMI Standards
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch1: Introduction
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch2: Principles and Concepts
• 2.1 Introduction
• 2.2 Scope of Project Estimating
– Identify the scope of estimating
– Identify related items confused with estimating
• 2.3 Key Roles in Estimating
– Estimators
– Customers
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©2010Permission is granted to PMI for PMI® Marketplace use only
Ch2: Principles and Concepts
• 2.4 Life Cycle of an Estimate
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Ch2: Principles and Concepts
• 2.5 Evolving Estimates
– Available information
– Confidence
– Baselining estimates
– Setting expectations
– The use of contingency reserves
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Evolving Estimates
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Ch2: Principles and Concepts
• 2.6 Use of Metrics
– Historical data for planning
– Monitoring progress against baseline
– Calibrate models
• 2.7 Causes of Variance
– Evolution of requirements
– Change controls
– Operational problems
– Faulty estimating
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©2010Permission is granted to PMI for PMI® Marketplace use only
Ch2: Principles and Concepts
• 2.8 Characteristics of a Good Estimate
– U.S. General Accounting Office
• 2.9 Industry Differences
– Industry sectors
– Characteristics of industries
– Process and techniques
• 2.10 Summary
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©2010Permission is granted to PMI for PMI® Marketplace use only
Ch3: Prepare to Estimate
Inputs
Activities
Outputs
3.2.1 Project
Documents
3.2.2 Experts
3.2.3 Estimating
Techniques
3.2.4 Constraints and
Assumptions
3.2.5 Additional
Influences
3.2.6 Historical
Project Information
3.3.1 Create
Project Estimating
Approach
3.4.1 Project
Estimating Approach
3.4.2 Estimating
Information
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch3: Prepare to Estimate
• 3.1 Introduction
• 3.2 Inputs
– Project documents
– Identify experts
– Identify estimating techniques
– Constraints and assumptions
– Additional influences (OPA, Environment)
– Historical project information
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©2010Permission is granted to PMI for PMI® Marketplace use only
Ch3: Prepare to Estimate
• 3.3 Description
– Create Project Estimating Approach
• Scope of estimates
• Technique
• Templates
• Resource needs
• Use contingency
• Management and monitoring
• Constraints
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
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Ch3: Prepare to Estimate
• 3.4 Outputs
– Project estimating approach
– Information and resources to create an estimate
• 3.5 Considerations
– Spend appropriate time planning
– Expectations management
– Perception of false precision
• 3.6 Summary
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch4: Create Estimates
Inputs
4.2.1 Project
Estimating Approach
4.2.2 Estimating
Information
4.2.3 Estimators
4.2.4 Enterprise
Environmental Factors
4.2.4 Organizational
Process Assets
Activities
Outputs
Create Estimate
4.3.1 Use of Analogous
Techniques
4.3.2 Use of Parametric
Techniques
4.4.1 Completed
Estimates
4.4.2 Basis of
Estimates
4.3.3 Use of Bottom Up
Techniques
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch4: Create Estimates
• 4.1 Introduction
• 4.2 Inputs
– Project estimating approach
– Estimating information
– Estimators
– Enterprise Environmental Factors
– Organizational Process Assets
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch4: Create Estimates
• 4.3 Types of Estimating Techniques
– Analogous Techniques
• Ratio, range, three point (PERT)
– Parametric Techniques
• Test point, Function Point, Use Case Point,
Complexity Point, etc.
– Bottom Up/Activity Based Techniques
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Estimation Techniques (Illustrative)
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Ch4: Create Estimates
• 4.4 Outputs
– Completed estimate
– Basis for estimates
• 4.5 Considerations
– Optimism in estimates
– Progressive elaboration of estimates
– Normalization/Inflation
– Use of expert judgment (Delphi)
– Use several models
• 4.6 Summary
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch5: Manage Estimates
Inputs
5.2.1 Baseline
Estimates
5.2.2 Approved
Changes
5.2.3 Human
Resource Plan
5.2.4 Work
Perf Indication
5.2.5 Organizational
Process Assets
5.2.6 Project
Estimating Approach
Activities
Outputs
Manage Estimate
5.4.1 Updated
Estimates
5.3.1 Manage the
Estimate
5.3.2 Use of Tools
and Techniques
5.4.2 Updated
Forecast
5.4.3 Change
Log Updates
5.4.4 Reporting/
Communication
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch5: Manage Estimates
• 5.1 Introduction
• 5.2 Inputs
– Baseline estimates
– Approved changes to the baseline
– Human resources plan
– Organizational Process Assets
– Project Estimating Approach
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch5: Manage Estimates
• 5.3 Description
– Living plan process
– Change management against
baseline
– Use of tools such as PMIS, EVM
• 5.4 Outputs
– Updated estimate/forecast
– Change log
– Reports and communications
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch5: Manage Estimates
• 5.5 Considerations
– Capture actuals to recalibrate models
– Variance analysis and understanding impacts
– Diligent change control
– Organizational culture
• 5.6 Summary
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©2010Permission is granted to PMI for PMI® Marketplace use only
Ch6: Improve the Process
Inputs
6.2.1 Project Info
6.2.2 Project
Estimating Approach
6.2.3 Historical Project
Information
6.2.4 Baselined
Estimates
6.2.5 Updated
Estimates/Forecasts
6.2.6 Change Log
6.2.7 Actuals Versus
Estimate Data
6.2.8 Stakeholder
Feedback
6.2.9 Organizational
Process Assets
Activities
Outputs
Improve Estimating Process
6.3.1 Gather
Estimating Information
6.3.2 Assess Estimating
Process
6.3.3 Determine Root Causes
and Lessons Learned
6.3.4 Develop Action
Plan for Changes
6.3.5 Implement Action Plan /
Share Lessons Learned
6.4.1 Updated
Tools and
Techniques
6.4.2 Updated
Organizational
Process Assets
6.4.3 Lessons
Learned
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch6: Improve the Process
• 6.1 Introduction
• 6.2 Inputs
– Project information/historical project information
– Project estimating approach
– Baseline estimates/updated estimates
– Change log
– Stakeholder feedback
– Organizational Process Assets
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch6: Improve the Process
• 6.3 Description
– Gather estimating information
– Assess estimating process
– Determine root causes and lessons learned
– Develop action plan for change
– Implement changes and share lessons learned
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Ch6: Improve the Process
• 6.4 Outputs
– Updated estimating processes and tools
– Updated Organizational Process Assets
– Lessons Learned
• 6.5 Considerations
– Spend appropriate time
– Consider skill set to facilitate sessions
• 6.6 Summary
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©2010Permission is granted to PMI for PMI® Marketplace use only
Agenda of Session
• Standard Overview
• Content Overview
• Questions
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
©2010Permission is granted to PMI for PMI® Marketplace use only
Contact Information
• Name: Kerry Wills, Chris Richards
• Email: [email protected]
• Phone: 860-985-9235
• Session Number #
Presentation Title
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©2010 Permission is granted to PMI for PMI® Marketplace use only