Smart Proposal For You Fixed Price Deal

by Oleg MizovPMO Competence Manageromizov@softserveinc.com

Agenda

Smart Proposal ?

Proposal Creation

FlowEstimation Building a

TeamRisk

ReservesDetermining

budget Sign!

• Standalone document• Clearly defines project scope, timeframes and costs.• Has all necessary legal sections• In most cases should have a detailed description of chosen development approach, risk and

change management strategies, etc.

Project Proposal

• Solution Description• Architecture Overview and Solution Design• Integration Approach and Deployment Aspects• UI/UX Approach• Non-Functional Requirements and QAS

• Project Scope and Out-Of-Scope• Assumptions. Limitations. Dependencies• Deliverables• Schedule and Milestones• Project Cost

Project Objectives

Risks Management – is the only instrument in arsenal of Project Manager how to proactively influence on a project future.

Statements:• Risks identification and assessment sessions (part of Management Process)• Risks monitoring and control activities• Risks communications• List of already identified risks and mitigation strategies

Risks Management

Change management is a systematic approach to dealing with change both from the perspective of internal and external changes.

Statements:• Types of changes• Change Control Board• Change flow• Change management system

Change Management

• Definition of Done• Acceptance definition• Acceptance terms and period• Defects classification• Defects fixing obligations and SLAs• Acceptance scenarios

Work Acceptance

Creation Flow for a Smart Proposal

Proposal Creation Flow1 Define Scope

2 Architecture WBS

3 DEV estimates QC estimates Other efforts estimates Finalize assumptions

4 Determine duration constraints

5 Determine Team and Resources

6 Create initial schedule

7 Finalize Risks Plan Risk responses Add reserves

8 Calculate costs Determine budget

Proposal Creation FlowPM BA

ArchitectDefine Scope Architecture

WBS

Estimates, Assumptions

Determine Duration, Team

Create Initial Schedule

Identify Risks, Plan Responses, add reserves

Calculate Costs and Budget

Estimations

Estimation approach Category Examples of the Technique

Analogy-based estimation Formal estimation model ANGEL, Weighted Micro Function Points

WBS-based (bottom up) estimation Expert estimation Project management software, company specific

activity templates

Parametric models Formal estimation model COCOMO, SLIM, SEER-SEM, TruePlanning for Software

Size-based estimation models Formal estimation model

Function Point Analysis, Use Case Analysis, SSU (Software Size Unit), Story points-based estimation in Agile software development

Group estimation Expert estimation Planning poker, Wideband Delphi

Mechanical combination Combination-based estimationAverage of an analogy-based and a Work breakdown structure-based effort estimate

Judgmental combination Combination-based estimation Expert judgment based on estimates from a parametric model and group estimation

Estimation Techniques

Pert Technique

PERT TechniquePros:• Shows uncertainty• Allows to calculate probability of hitting

Cons:• Won’t help if uncertainty is not high (1o-2m-3p • Need to train people

For high-level estimation or estimates validation:• Analogous estimation by historical database

For project planning and budgeting use a combinations of several techniques• Step 1: Bottom – Up WBS decomposition• Step 2: PERT for development tasks• Step 3: Parametric estimates for non-development activities (like bugs-fixing, automation

testing, manual QC, etc.)• Step 4: Statistics-based reserves calculations

Best Practice in Estimation

Team

• Team composition is determined by a Project Manager based on :• A project scope statement, Gant chart;• Project constraints;• List of purchases;• Technology stack;• Existing team availability;• Architecture recommendation.

Team Composition

• Team location is determined based on :• Staffing urgency;• Cost baselines;• Available resource in pools.

Team Location

Team Release Plan

• Release Plan is:• Developed during the project planning and updated throughout all

phases• Communicated to the project team• Communicated to a Client

Reserves

Expected Monetary Value = Likelihood (%) * Consequence ($)

Contingency Reserves

Management Reserve

• Is an amount of a total allocated budget.• Is stated as 5%-15% from total budget depending on a type of a program.• Is established in the last turn after full scope and budget are in place.

Typical (Known) Reserves

Reserve Name Percentage from dev estimate

Agile Ceremonies 5%-20%Sprint Stabilization 10%

Release Stabilization 0,25 - 1 months

Dev Estimate Risk buffer 10%

Sprint 0 0,25 -0,5 months

Communication 5%-15%

Management 5%

Reserves to be considered during dev estimation:Manual/Automation QC estimatesUnit TestingCode ReviewsBug Fixing

20% - 70%0% - 20%5% - 10%

15% - 40%

Hand Off 0,5 months

Schedule vs Budget Reserves

• Project Duration < 3 months.• Only schedule reserves are added. • Budget buffers do not make sense due to lack of time to increase and train a team.

• Project Duration > 3 months. • Both cost and schedule reserves are added.• Reserve sizes are calculated based on qualitative risk analysis

Determining Budget

Determining Budget. Slow (Ideal) Approach

Determining Budget. Fast (Realistic) Approach

• Step 1. Calculate Full(!) Team Cost per one month• Step 2. Team Cost * Project Duration• Step 3. Add budget for Team Ramp up and Project Acceptance phases• Step 4. Add budget for Procurements• Step 5. Add Bonuses & Team Buildings• Step 6. Add Business trips• Step 7. Allocate Contingency and Management reserves

Proposal/SOW Approval

JUST APPROVE!

Questions?

Monitor and Control

Schedule Performance Index

• The Schedule Performance Index tells you how efficiently you are actually progressing compared to the planned progress

• Schedule Performance Index = (Earned Value)/(Planned Value)

Sprint 1 Sprint 2 Sprint 3 Sprint 4 Sprint 5 Sprint 6 Sprint 7 Sprint 8 Sprint 9 Sprint 100.0

0.2

0.4

0.6

0.8

1.0

1.2

0.8 0.8

0.9

1.1 1.1 1.0 1.0 0.91.0 1.0

Schedule Performance Index

Schedule Performance Index

Earned Value Measurement

Cost Performance Index

• The Cost Performance Index helps you analyze the efficiency of the cost utilized by the project.

• Cost Performance Index = (Earned Value)/(Actual Cost)