Transcript Estimating Project Costs & Time

Estimating Project Costs & Time
Project Management Unit, Lecture 5
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Cost & Schedule Estimates
• As previously mentioned the principal measures of a
project are cost, time (schedule) and performance
• For a given project one or more of these measures may be
constrained
– For LA ACES your launch opportunity has a fixed date and you
must have a payload ready by this date
• Initial estimates on cost and schedule are essential to
determine if your plan is realistic
– May need to plan for (or implement) trade-offs according to
established priorities
• Cost and schedule needs to be monitored throughout the
project life-cycle
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Factors affecting the estimate
• Task Definition: The completeness of your project definition
will determine if all tasks have been taken into account.
• People Productivity: People do not focus on a task with 100%
efficiency. The difference between “calendar time” and effort
must be considered.
• Project Structure: A dedicated project team will be able to
focus its effort on completing the project effectively.
• Padding: People may increase estimates to take into account
unknown risks and this may force an unnecessary trade-off.
• Culture: What is deemed acceptable behavior by the
organization (e.g. padding vs. accuracy) will affect estimates.
• Downtime: Equipment repairs, holidays, vacations, exam
schedules can all affect the time estimate.
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Categories of estimates
• The Macro or Top-Down approach can provide a quick but
rough estimate
– Done when the time and expense of a detailed estimate are an issue
– Usually occurs during conception stage when a full design and WBS are
not available
– Requires experienced personnel to do the estimate
– Can be highly inaccurate
• A Micro or Bottom-Up approach can provide a fairly accurate
estimate, but is time consuming
– Takes into account the project design and a “roll-up” of WBS elements
– May require multiple personnel and time to complete
– If done properly, a bottom-up estimate can yield accurate cost and time
estimates
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Steps to developing the estimates
• Start with a Macro estimate then refine with a Micro
estimate
• Develop the general project definition
• Perform a macro cost and time estimate
• Develop the detailed project definition and WBS
• Roll-up the WBS elements as part of a micro estimate
• Establish the project schedules
• Reconcile differences between the macro and micro
estimates
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Macro Estimates
• Scaling: Given a cost for a previous project then an estimate
for a new project can be scaled from the known cost. E.g
NASA, at times, uses spacecraft weight to estimate total cost.
• Apportion: Given a similar previous project, costs for major
subunits of the new project would be proportional to similar
subunits in the previous project.
• Weighted Variables: Certain types of projects can be
characterized by specific parameters (e.g. number of inputs,
number of detector channels). Historical costs & times for
single units of these parameters are weighted by the numbers
required for the new project.
• Learning Curve: If the same task is repeated a number of
times there will be a cost / time savings relative to the first time
the task is done.
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Micro Estimates
• Template: Uses historical data to establish detailed costs and
schedules for project subunits. A new project composed of
some combination of these subunits can then be quickly
estimated.
• Ratio: Similar to the Macro ratio method but applied to
specific tasks associated with project subunits. For example, if
it takes 1 day to build & test a particular sensor unit, then an
instrument with 10 sensors would take 2 technicians, 5 days to
complete.
• WBS Roll-up: Times and costs associated with the lowest
level WBS work packages are estimated and then these are
added or rolled-up to yield the costs for higher level units. This
method provides the most accurate estimates at the expense of
time devoted to developing the estimate.
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Phased Approach
• On a phased project, details over the entire life-cycle may not be
immediately available.
• During the each phase details for the remaining phases are
refined, modified or changed.
• In this case an alternate approach may be appropriate.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Develop the general project definition
Perform a macro cost and time estimate for all phases
Develop a detailed definition and WBS for the immediate phase
Roll-up the WBS elements as a micro estimate for the immediate phase
Establish a detailed schedule for the immediate phase
Reconcile differences between previous macro & current micro estimates
Refine the macro cost and time estimate for the remaining phases
Refine the schedule for the remaining phases
Repeat items 3-8 just prior to next phases for the entire life-cycle
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Guidelines for Estimates
• Estimates should be done by the person most familiar with the
task
• If possible obtain estimates from several people and use the
variance for risk assessment (lecture 7)
• Multiple estimates should be done independently to avoid
“GroupThink” (lecture 1)
• Base the estimates upon normal conditions.
• Use consistent units when estimating task time.
• Work package estimates should not include contingencies
• Use a separate risk assessment (lecture 7) for estimating the
affect of abnormal conditions and contingencies.
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