1. Project Estimation

2. 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.

3. 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

4. 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.

5. Estimation Convergence Graph
Let us take a look at the estimation convergence graph

6. 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

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

8. 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

9. 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.

10. 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

11. 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.

12. 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.

13. 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

14. 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

15. 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.

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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.

25. 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.

26. 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