{"id":84765,"date":"2017-08-24T21:27:55","date_gmt":"2017-08-25T01:27:55","guid":{"rendered":"http:\/\/rbach.net\/blog\/index.php\/"},"modified":"2024-05-24T18:47:56","modified_gmt":"2024-05-24T22:47:56","slug":"guestimating-for-project-managers","status":"publish","type":"post","link":"https:\/\/rbach.net\/index.php\/guestimating-for-project-managers\/","title":{"rendered":"Guestimating for Project Managers"},"content":{"rendered":"

\"GuestimatingSince the dawn of time, one of the questions most likely to strike fear into the heart of even seasoned project managers is, \u201cSo how much is this project going to cost?\u201d In fact, Bob Kreha<\/a><\/span><\/span> at Brightwork<\/a> says there are hieroglyphs<\/a><\/strong> on the wall of the tomb of the great pharaoh<\/a> Khufu<\/a><\/strong>, depicting the pharaoh asking\u00a0Vizier Hermiunu<\/span><\/a>, the pyramid’s project manager<\/strong>, this very question about his burial pyramid and, a few walls down, a second depiction of the project manager being thrown into a nest of crocodiles<\/a> in the Nile after the project overran its budget by a few thousand debens.<\/p>\n

\"\"<\/a>As evidence of how little project management progressed, Mr. Kreha relates how he sat in a questioning-techniques-in-training estimation meeting and watched an \u201cagile<\/a>\u201d project team<\/strong> assign \u201cpoints\u201d to \u201cstories\u201d in a vain attempt to estimate how much work they might get done in the next two weeks, aka the next sprint. And inevitably, a new team member would ask at some point, \u201cso how many hours are there in a point?\u201d Immediately, this agile novice is mocked mercilessly! \u201cYou don\u2019t understand,\u201d the scrum master<\/a> and other developers say, \u201cpoints aren\u2019t convertible into hours or dollars.<\/strong> We use a Fibonacci sequence<\/a> \u2013 you know, 1,2,3, 5, 8, and 13 \u2013 to estimate how much effort a story is. It has nothing to do with hours or money.\u201d<\/p>\n

And so we project managers are still left holding the bag for estimating projects, often early in a project\u2019s lifecycle, and then being held accountable for them as if we were clairvoyant<\/strong>. What can be done?<\/p>\n

Brightwork’s Kreha offers some hints on how to stay out of the croc pond. Start doing them, that might help:<\/p>\n

Separate hard costs from soft costs<\/h3>\n

\"Separate<\/a>When you\u2019re estimating. Hard costs are things like license fees. Once you have a quote from a vendor<\/strong> (stall until you have one) you can be pretty confident that\u2019s what the cost will be. Hourly labor, and time and material contracts in general, are obviously softer since you\u2019re funding time and not deliverables per se.<\/p>\n

For softer costs, use \u2018burn rates<\/a><\/strong>\u2019 to look at low, likely, and high ranges for labor costs. For example, if you have a team of 10 with an average bill rate of $100\/hour and they will be working on your project more or less full time for the next 5-6 months, you\u2019re looking at $860k to $1M if I did the math right. Don\u2019t get suckered into estimating hours without thinking about time, because things ALMOST ALWAYS take longer than you planned<\/strong>.<\/p>\n

Use ranges wherever possible<\/h3>\n

\"use<\/a>Early in a project, it at least helps to subliminally communicate to stakeholders that the project costs are still a bit squishy. I am sure we\u2019ve all seen estimates that have line items down to the dollar. Like $365,750.00. That\u2019s a terrible thing to do \u2013 it implies a precision that just isn\u2019t there.<\/p>\n

Don\u2019t EVER leave out contingency!<\/a><\/strong> At the project outset, make sure it\u2019s 25% of the total project estimate. And try your best NOT to tell anyone it\u2019s there. That\u2019s YOUR insurance policy to keep you out of the croc pond<\/p>\n

Get estimates from multiple sources<\/strong> if possible. Have a technical team do an estimate. Have a trusted project manager do one. And maybe even ask the stakeholders what they think the project should If the numbers you get back are wildly variant, you have a lot of work to do to rationalize them down to something plausible.<\/p>\n

\"Bidders\"<\/a>Relentlessly track your actual costs as you incur them<\/strong>! And more importantly, once you see them drifting away from the estimate or any underlying assumptions you made, TELL someone<\/strong> right away. Delivering financial bad news is one thing; delivering financial bad news 75% through a project is PM malpractice.<\/p>\n

Figure out who, if anyone, is likely to be joining you in the croc pool.<\/strong> Trust their numbers more than someone who will skate out the side door faster than Usain Bolt if the project costs start going sideways.<\/p>\n

rb-<\/strong><\/em><\/p>\n

We have all been there, in the croc pond, under the bus, or in front of the train. Someone didn’t complete their task on time or misunderstood a requirement or just screwed up. These suggestions can help insulate you from some of the inevitable problems that are part of being a project manager.<\/em><\/p>\n

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