1. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 1 Estimating Activity Times, & Ultimately Project Duration IMPLEMENTATION PLANNING & SCHEDULING

2. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 2 At a recent (Feb 2010) Project Management Institute Chapter Meeting in Honolulu, member-participants identified their was the difficulty of developing At a recent (Feb 2010) Project Management Institute Chapter Meeting in Honolulu, member-participants identified their Major Concern was the difficulty of developing realistic time estimates Realistic Scheduling is particularly critical for Firm Fixed Price (FFP) Contracts Contractors with Firm Fixed Price (FFP) Contracts Cost Plus Fixed or Incentive Fee (CPFF & CPIF) -type Contracts. Clients/Donors awarding Cost Plus Fixed or Incentive Fee (CPFF & CPIF) -type Contracts. Activity Time Estimating & Project Scheduling A “CRITICAL” Problem

3. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 3 Experienced Project Managers unanimously acknowledged that Time estimates were typically Over-optimistic for one or more principal reasons: before CLIENT DRIVEN The Client establishes the project completion deadline before technical analysis, consultation or project management feedback CONTRACTOR RESPONSE In order to be “Fully Responsive” Contractors (Project Managers) accept the Client’s deadline to hopefully win the contract Project Activity Duration Estimating & Scheduling

4. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 4 After technical analysis Contractors either Arbitrarily Arbitrarily “Cut and Paste” activity time estimates to fit the Client’s pre-determined schedule. Use the standard “PERT 3 time estimating method”“Optimistic Time” Use the standard “PERT 3 time estimating method” but tend to favor the “Optimistic Time” over the Most Likely Time in “Cutting and Pasting” their final schedule proposal. “Most Likely Time” CONTRACTOR IMPLEMENTATION experience is that even the “Most Likely Time” is usually over- optimistic & unrealistic! Project Activity Duration Estimating & Scheduling

5. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 5 REMEDY CONTRACTOR RESPONSE: Contractors (Project Managers) Conduct the Technical Analysis using a supplement to the PERT 3-time estimating approach that improves the probability of developing a more realistic time estimate Conduct the Technical Analysis using a supplement to the PERT 3-time estimating approach that improves the probability of developing a more realistic time estimate Provide feedback to the Client ASAP -- Brief the Client to demonstrate why their deadline is unrealistic, and appeal for duration extension, or reduction in Scope of Work before submitting a bid Provide feedback to the Client ASAP -- Brief the Client to demonstrate why their deadline is unrealistic, and appeal for duration extension, or reduction in Scope of Work before submitting a bid If Client insists on the Original Project Completion Deadline &/or Scope, either If Client insists on the Original Project Completion Deadline &/or Scope, either Get a change order ASAP if you are the successful bidder Get a change order ASAP if you are the successful bidder Don’t Bid and consider yourself lucky you won’t have to deal with the time, cost & quality problems that will inevitably arise! Don’t Bid and consider yourself lucky you won’t have to deal with the time, cost & quality problems that will inevitably arise! Project Activity Duration Estimating & Scheduling

6. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 6 Who Provides the Best Estimates? Those who know the work Those who are accountable for the work Those who do the work

7. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 7 Parametric Modeling Parametric modeling uses project characteristics (parameters) in a mathematical model to predict project costs. Example: In construction, the per square meter of living space is often used to estimate cost.

8. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 8 Definitive (Bottom Up)

9. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 9 Estimating Project Duration is not Easy Time/Cost/Quality affect each other Estimating Methods affect accuracy Estimating as Accurately as possible is important How much detail do you need?  Top Down  Bottom up In the Real World, Estimates and Actuals are usually different -- which results in continuous adjustments to the schedule.

10. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 10

11. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 11 RISK QUANTIFICATION Determining Risk Events & Risk Tolerance

12. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 12 Program Evaluation & Review Technique (PERT) A 3-time probability-based time estimating technique often used to estimate activity & project duration when there is uncertainty with individual activity time duration estimates t e = O + 4M + P 6 i.e. a Weighted Average or “Mean” of the range of possibilities

13. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 13 PERT Method – Activity Duration Estimate Formula: Optimistic + (4 x Most Likely) + Pessimistic 6 Example: Optimistic time is 10 weeks Pessimistic time is 35 weeks Most likely time is 15 weeks 10+(4x15)+35 = 10+60+35 = 105 6 6 6 = 17.5 weeks, or 18 weeks (rounded up) t e = 17.5 weeks, or 18 weeks (rounded up) Expected Time

14. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 14 The “PERT” Formula A Fundamental Flaw & Caution the probability for completing the Activity on time is only 50% Using the PERT formula to estimate activity duration, the probability for completing the Activity on time is only 50% under- estimated at least half of the time In other words, at the outset, the Project Activity duration is under- estimated at least half of the time, so will most likely be overrun.

15. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 15 Russian Roulette “RR” Project Managers who use the Standard PERT 3-Time Formula to Estimate Activity timing run a high risk of committing Suicide... Even Worse than Playing RUSSIAN ROULETTE !!!

16. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 16 Russian Roulette “RR” Surviving What is the Probability of Surviving “RR” with One Round in a Six Cylinder Chamber Revolver? Point the Gun at Your Head Spin the Chamber Pull the Trigger Probability of being killed is Probability of being killed is 1 / 6 = 17 % Surviving 83% Thus Probability of Surviving = 100% - Probability of Dying = 83%

17. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 17 Russian Roulette “RR” And the Probability of Surviving with: Three Rounds Three Rounds in the Chamber = 3 / 6 = 50 % = 3 / 6 = 50 % (i.e. the same odds as the weighted- average PERT 3 time formula)

18. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 18 Would you play Russian Roulette with One bullet? Then Why play Project Management with the “PERT 3 Time Formula” the equivalent of Russian Roulette with Three bullets?

19. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 19 PERT Formula — A Work-Around Solution Ken Smith’s “Realistic Time” Strategy 1. Use the PERT 3 time formula during the planning stage as the first step in estimating individual activity durations add two standard deviations 2. Then add two standard deviations to the activity duration 95% This will readjust the likelihood of completing the activity scheduled time to 95%

20. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 20 Basic PERT/CPM Formula Activity te = opt + 4 ML + pess 6 Activity Estimated = Standard Deviation pess - opt pess - opt 6

21. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 21 NORMAL CURVE, RANGE, STANDARD DEVIATION, and RELATED PROBABILITIES X -1 SD +1 SD -2SD + 2SD -3SD +3SD 68.26% 68.26% 95.44% 95.44% 99.74% 50% 50% -3 -2 -1 +1 +2 +3 0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13% MEAN 0 % 100% 100% 95% 95%

22. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 22 Ken Smith’s prescription for improving activity duration estimates, & Project Scheduling te r = opt + 4 ML + pess + 2 Std. Devs 6 Realistic Activity Time

23. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 23 Realistic Time Example Optimistic Time = 3 ; Most Likely = 7 ; Pessimistic = 23 3 PERT te = 3 + 4(7) + 23 / 6 = One Estimated Standard Deviation (ESD) = 3.3 [23 – 3] / 6 = 3.3 6.6 So Two ESDs = 3.3 x 2 = 6.6 THUS the “Realistic Activity Time” (with a 95% probability of attainment) = 9 + 6.6 = 15.6, or 16 rounded 9 (3 + 28 + 23) / 6 = 54 / 6 = 9

24. Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand © 2010, Dr. Kenneth F. Smith, PMP 24 A NOTE ON PROBABILITY A Risk Event could still occur Despite a Low Probability and A Risk Event might not occur Despite a High Probability There are No Guarantees !!!