Project Estimation

Module Objective After this module you will be able to: Explain estimation approaches Explain estimation flow and process Explain Function Point Analysis(FPA) Explain Work Breakdown Structure(WBS) Explain Wideband Delphi method. Create an accurate estimation for a project. www.prolearninghub.com

Estimation in Project Management Estimation is one of the crucial steps in project management lifecycle. In a practical scenario, when a project is being awarded to a vendor by a customer, the customer asks a question such as: How much will the project cost? How much time will it take to complete the project? How many resources will be required to complete the project? Ironically, these questions are very easy to answer once the project is completed. The challenge here is to answer the customer before the start of the project. These answers will help the customer to take various decisions before proceeding with the project. The possible way out in the situation is to predict. The quality of prediction depends on the estimator’s ability to look into the future and see all the unknown unknowns at the time of estimation. This ability can be gained through experience, historical data or from experts www.prolearninghub.com

Variation in Estimation No matter whichever means we adopt for prediction, we all know that prediction is associated uncertainty. This uncertainty leads to variance in the estimates. This variance could be positive or negative. It is expressed in percentage(+ or – X %). If the variation is positive, it is called over run. If the variation is negative, it is called under run. This variation also depends on the quality of information available at the time of estimation. At the time of estimation, we have very less information, so the percentage of variation would be large. But, if the information is available at a granular level, the variation would be less. As we progress through the phases of the project, the clarity of information that would be available for estimation would be much better when compared to that at the beginning. Hence, it would be better idea for the Project Managers to re-estimate at every phase of the project. The Project Managers will be aware of the current situation of the project and can take appropriate steps to control the situations that lead to the variations. www.prolearninghub.com

Estimation Convergence Graph Let us take a look at the estimation convergence graph www.prolearninghub.com

Different means of Predictions of the Project Estimates Let us take a look at the different ways in which one might predict the project estimates www.prolearninghub.com

Worldwide Project Statistics According to the worldwide project statistics, the main culprit behind effort overrun is wrong Worldwide Project Statistics www.prolearninghub.com

Parameters of Estimation The various parameters typically estimated in any project are size, effort, schedule consisting of time and resources and cost. Among all these parameters, size is the fundamental parameter. The rest of the parameters in a way depend on the size parameter. Size Effort Schedule Resource Cost www.prolearninghub.com

Purpose of Estimation Estimations are needed in projects to help decision making in various phases. Estimations help to find whether the project is feasible or not. When initiating a project, estimates are needed for creating the schedules and making resourcing decisions. At the time of bidding, estimating the size, effort and schedule of the software project helps to understand how much one should pay for it and whether the proposals received are realistic or not. Estimations at various phases of the project helps the Project Manager to understand and manage the deviations, if any from the planned. www.prolearninghub.com

Rough Oder of Magnitude (ROM) or Ballpark Types of Estimate Let us take a look at the different types of estimates: Rough Oder of Magnitude (ROM) or Ballpark Budget Estimate Contractual Quote Re-Estimate www.prolearninghub.com

Reasons for Incorrect Estimations The reasons for making incorrect estimations are: Lack of clarity of requirements Non availability of baseline for estimations Lack of experience in estimation. Lack of scientific and standard estimation technique knowledge Lack of time for estimation. Working towards a suggested value. Lack of estimation methodology knowledge. Lack of application knowledge. www.prolearninghub.com

Journey to Create Estimation Customer Business Requirements Size Constraints, Risks Productivity Effort Schedule Risks FTE Costing Guidelines Cost Proposal/Bid to Customer Let us take a look at the whole journey from getting the requirements to creating a proposal for the customer. www.prolearninghub.com

Estimation Flow Legend Requirements Size Productivity Data Estimated Measure Legend Effort Size Productivity Skill Productivity Execution Complexity Risks/ Uncertainties Resource Availability Unit Cost Cost Dependencies/Constraints Time Schedule www.prolearninghub.com

Scope Creep/Requirements Clarity or Change Estimation during Project Lifecycle Let us take a look at the phases where PMs need to estimate in the SDLC process Lead Customer Interaction Proposal Win/Loss Project Acquisition Process L0-Estimate SDLC Process Project Initiation Project Planning Project Execution Requirements Planning Design Construction Post Construction L1-Estimate L2-Estimate L3-Estimate L13 Variance Estimation Review & Updation Scope Creep/Requirements Clarity or Change www.prolearninghub.com

Guidelines that Help Estimate Guidelines that help in estimating the size of the project across the organization are: Calendar months: A typical calendar month is 21 days. Working hours per day: Typical working day is 9 hours. Weekly work is 45 hours. Productivity data: The productivity data needs to be taken from the similar projects data or PEG data based on the technology used. Complexity guidelines: The complexity guidelines need to be drafted by a senior team member of the project. www.prolearninghub.com

Inputs to Estimation The inputs required for estimation are: Request for Proposal(RFP) Statement of Work (SOW)/Contractual Agreement Software Requirement Specification(SRS) Change Request(CR) Business Options, Design Documents Estimation Methodology Historical Estimates Constraints www.prolearninghub.com

Commonly Used Estimation Techniques Function Point Analysis (FPA) FPA provides a set of rules to functionally size the software work product. FPA is a method of functional size measurement. It assesses the functionality delivered to its users, based on the user’s external view of the functional requirements. It measures the logical view of an application as compared to measuring the physically implemented view or the internal technical view. Function Point Analysis(FPA) Work Breakdown Structure(WBS) Wideband Delphi Technique www.prolearninghub.com

Commonly Used Estimation Techniques Function Point Analysis(FPA) Work Breakdown Structure (WBS) A WBS, in project management is a deliverable oriented decomposition of a project into smaller component. A WBS element may be a product, data, service or any combination thereof. A WBS also provides the necessary framework for detailed cost estimating and control along with providing guidance for schedule development and control. Work Breakdown Structure(WBS) Wideband Delphi Technique www.prolearninghub.com

Commonly Used Estimation Techniques Function Point Analysis(FPA) Wide band Delphi Technique The wideband Delphi estimation method is a consensus-based technique for estimating effort. It helps to develop a detailed work break down structure. It provides the foundation for bottom-up effort and schedule or size estimation. Work Breakdown Structure(WBS) Wideband Delphi Technique www.prolearninghub.com

FPA Calculation Procedure Application to be counted Type of count & Application Boundary Transaction Functions External Outputs External Queries External Inputs Unadjusted Function Point Count External Logical Files Value adjustment Factor Data Functions Internal Logical Files Final Adjustment FP Count 14 GSC www.prolearninghub.com

Work Breakdown Structure A Work Breakdown Structure (WBS) is a fundamental project management technique for defining and organizing the total scope of a project, using a hierarchical tree structure. The first two levels of the WBS (the root node and level 2) define a set of planned outcomes that collectively and exclusively represent 100% of the project scope. At each subsequent level, the children of a parent node collectively and exclusively represent 100% of the scope of the parent node. A WBS is a list of tasks, which if completed, will produce the final product. There are many ways to decompose a project into tasks. The project can be broken down by: Product Specification/feature called as Product WBS Project phase wise tasks called as Project WBS Combination of the two called as merged WBS www.prolearninghub.com

Project WBS of a Bank Application Let us take a look at the Product WBS of a bank application NEFT Savings Recurring Fixed Deposit Home Loan Personal Loan ATM Withdrawal Electronic Loan Deposit Bank Application www.prolearninghub.com

Requirements Elicitation Project WBS of a Bank Application Let us take a look at the Project WBS of a bank application. Deposit Withdrawal Requirements Elicitation Design Prepare High Level Design Review High Level Design Rework on the Review Comments Obtain Sign Off from Customer and Baseline Code Unit Test System Integration Test User Acceptance Test Move to Production www.prolearninghub.com

Wideband Delphi Method The Wideband Delphi method helps to develop a detailed work breakdown structure. It provides the foundation for bottom-up effort and schedule or size estimation. Let us take a look at the estimation process using the Wideband Delphi Method. The starting point for a Delphi session is a specification of the problem being estimated or an initial high level task list or project schedule. The outputs are a detailed project task list, estimation assumptions and a set of task and overall project estimates, one from each participant. Then these estimates from each participant are consolidated and reviewed when the exit criteria are met or the session is completed. The resulting range of estimates is likely to be a more realistic estimate than any single estimate. The estimators may also prepare a list of associated quality, process-related and overhead tasks to be used as an input to project planning. www.prolearninghub.com

Individual Preparation Wide Band Delphi Method Estimation Steps Planning Kickoff Meeting Individual Preparation Estimation Meeting Assemble Tasks Review Results The estimation process is carried out in different stages. www.prolearninghub.com

Project Estimation on BMS Document Name: Estimate Project Procedure Document Description Estimation is used at various stages of a project throughout the project management lifecycle. Estimate is associated With accuracy and the estimation accuracy increases with clarity in requirements. The purpose of Project Estimation Procedure document is to arrive at estimates for a project which shall be used as a basis for bidding and/or project planning and execution. The fundamental unit of estimate is size, which is arrived at by using a suitable estimation technique. The size is converted to effort using productivity norms. Effort is converted to costs and other cost elements are added, which finally becomes the basis for pricing www.prolearninghub.com