IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 1/22 Many IT projects continue to suffer from poor estimation. The accuracy of estimation has hardly changed from that reported in a seminal study carried out over 20 years ago. Based on findings from two recent survey-based studies, which replicated and then extended the original study, guidelines for improving IT project estimation are provided.

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 2/22 Agenda  Many IT Projects Still Suffer From Poor Estimation  Why Estimates Matter  Research Study 1  Research Study 2  Guidelines for Improving IT Project Estimation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 3/22 Many IT Projects Still Suffer From Poor Estimation  “Unrealistic expectations based on inaccurate estimates are the single largest cause of [IT project] failure”  Most project managers do a very poor job of estimating and, as a result, most IT projects are classified as failures—61%.  74% of challenged projects experience time overruns and 59% experience cost overruns.  Further evidence can be found in a review of 180 IT projects completed between , 5 64% of which suffered from poor estimation.

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 4/22 Agenda  Many IT Projects Still Suffer From Poor Estimation  Why Estimates Matter  Research Study 1  Research Study 2  Guidelines for Improving IT Project Estimation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 5/22 Why Estimates Matter  Accurate estimation is very important to IT project managers for a wide variety of reasons:  Avoiding the vicious cycle  Avoiding the ripple effect  Avoiding late-in-the-project discovery  Facilitating better budgeting  Evaluating project personnel  Generating more credibility for the project team

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 6/22 Agenda  Many IT Projects Still Suffer From Poor Estimation  Why Estimates Matter  Research Study 1  Research Study 2  Guidelines for Improving IT Project Estimation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 7/22 Organization-Level Analysis of Project Estimation  Lederer and Prasad (1992( published the results of a survey of 115 IT professionals on their organizations’ cost estimation practices, which is used as a baseline for this research.  The primary objective of the first study was to discover how project estimation perceptions and practices have changed over the more than 20 years since Lederer and Prasad’s original study.

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 8/22 Estimates use and practice

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 9/22 Bases of the Estimating Process

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 10/22 Causes of Inaccurate Estimates

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 11/22 Agenda  Many IT Projects Still Suffer From Poor Estimation  Why Estimates Matter  Research Study 1  Research Study 2  Guidelines for Improving IT Project Estimation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 12/22 Project-Level Analysis of Project Estimation  Study 1 enabled us to gain an overall view of organizational project estimation practices. We wanted to supplement these findings with a more detailed study of projects focused on project-level data. In Study 2, we therefore surveyed 115 IT professionals and asked them to respond with data about their most recently completed IT projects.  Another factor we wanted to explore is the changes in the IT development landscape since, with special interest on Agile Development.

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 13/22 Cost & Schedule Performance

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 14/22 Estimation Best Practices In Use

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 15/22 Method for Estimating Project Cost

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 16/22 Methods Used to Estimate Size and Complexity of IT Projects

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 17/22 Responsibility for Estimate Creation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 18/22 Estimate Timing and Presentation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 19/22 Project Success Criteria

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 20/22 Project Success Criteria

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 21/22 Agenda  Many IT Projects Still Suffer From Poor Estimation  Why Estimates Matter  Research Study 1  Research Study 2  Guidelines for Improving IT Project Estimation

IT Project Estimation: Contemporary Practices and Management Guidelines R. Ryan Nelson & Michael G. Morris - March 2014 Page 22/22 Guidelines for Improving IT Project Estimation  Admit You Have a Problem  Revisit the Prescriptions Offered by Lederer and Prasad  Conduct Project Retrospectives  Employ Estimation Tools  Understand Agile Approaches and Adapt Estimation Techniques Accordingly  Avoid Cognitive Biases Toward Estimation  Understand the Estimate- Convergence Graph  Understand the Difference Between a Target and an Estimate  Manage Stakeholders  Develop Estimation Competencies of Project Managers and Team Members