Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand...
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Transcript of Project Management in the GMS Learning Program 19-30 Apr 2010, Mekong Institute, Khon Kaen, Thailand...
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© 2010, Dr. Kenneth F. Smith, PMP
Estimating Activity Times,& Ultimately Project
Duration
IMPLEMENTATION PLANNING & SCHEDULING
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At a recent (Feb 2010) Project Management Institute At a recent (Feb 2010) Project Management Institute Chapter Meeting in Honolulu, member-participants Chapter Meeting in Honolulu, member-participants identified their identified their Major Concern was the difficulty was the difficulty of developing of developing realistic time estimates
Realistic Scheduling is particularly critical for Realistic Scheduling is particularly critical for
• Contractors with Firm Fixed Price (FFP) Contracts Firm Fixed Price (FFP) Contracts
• Clients/Donors awarding Cost Plus Fixed or Cost Plus Fixed or Incentive Fee (CPFF & CPIF) -type Contracts.Incentive Fee (CPFF & CPIF) -type Contracts.
Activity Time Estimating& Project Scheduling
A “CRITICAL” Problem
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© 2010, Dr. Kenneth F. Smith, PMP
Experienced Project Managers unanimously acknowledged that Time estimates were typically Over-optimistic for one or more principal reasons:
CLIENT DRIVEN The Client establishes the project completion deadline beforebefore 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
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© 2010, Dr. Kenneth F. Smith, PMP
After technical analysisAfter technical analysis ContractorsContractors either either• ArbitrarilyArbitrarily “Cut and Paste” activity time
estimates to fit the Client’s pre-determined schedule.
• Use the standard “PERT 3 time estimating Use the standard “PERT 3 time estimating methodmethod”” but tend to favor the ““Optimistic Optimistic TimeTime”” over the Most Likely Time in “Cutting and Pasting” their final schedule proposal.
CONTRACTOR IMPLEMENTATION experience is that even the “Most Likely Time”“Most Likely Time” is usually over-optimistic & unrealistic!
Project Activity Duration Estimating& Scheduling
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© 2010, Dr. Kenneth F. Smith, PMP
REMEDYREMEDY
CONTRACTOR RESPONSE: ContractorsCONTRACTOR RESPONSE: Contractors (Project Managers) (Project Managers)
• Conduct the Technical AnalysisConduct the Technical Analysis using using a a supplementsupplement to the to the PERT 3-time estimating approachPERT 3-time estimating approach that improves the probability of that improves the probability of developing a more realistic time estimatedeveloping a more realistic time estimate
• Provide feedback to the Client ASAPProvide feedback to the Client ASAP -- Brief the Client to -- Brief the Client to demonstrate why their deadline is unrealisticdemonstrate why their deadline is unrealistic, and appeal for , and appeal for duration extension, or reduction in Scope of Work before submitting duration extension, or reduction in Scope of Work before submitting a bida bid
• If Client insists on the Original Project Completion Deadline If Client insists on the Original Project Completion Deadline &/or Scope, either&/or Scope, either
• Get a change order ASAPGet a change order ASAP if you are the successful bidder if you are the successful bidder
• Don’t Bid Don’t Bid and consider yourself lucky you won’t have to deal and consider yourself lucky you won’t have to deal with the time, cost & quality problems that will inevitably arise!with the time, cost & quality problems that will inevitably arise!
Project Activity Duration Estimating& Scheduling
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© 2010, Dr. Kenneth F. Smith, PMP
Who Provides the Best Estimates?
• Those who know the work
• Those who are accountable for the work
• Those who do the work
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© 2010, Dr. Kenneth F. Smith, PMP
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.
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© 2010, Dr. Kenneth F. Smith, PMP
Overseas Trip Preparation
Accommodation / Booking
Travel Documents
Personal Belongings
Passport Visa Clothing Other Items
Plane Ticket Hotel
85k
10k 50k 25k
3k 7k 10k
30k 20k
15k
Definitive (Bottom Up)
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© 2010, Dr. Kenneth F. Smith, PMP
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.
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© 2010, Dr. Kenneth F. Smith, PMP
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© 2010, Dr. Kenneth F. Smith, PMP
RISK QUANTIFICATION
Determining
Risk Events &
Risk Tolerance
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Program Evaluation & Review Technique (PERT)
A 3-time A 3-time probability-basedprobability-based time time estimating technique often estimating technique often used to estimate activity & used to estimate activity & project duration when there is project duration when there is uncertainty with individual uncertainty with individual activity time duration estimatesactivity time duration estimates
te = O + 4M + P
6i.e. a Weighted Average
or “Mean”
of the range of possibilities
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© 2010, Dr. Kenneth F. Smith, PMP
PERT Method – Activity Duration Estimate
Formula:Optimistic + (4 x Most Likely) + PessimisticOptimistic + (4 x Most Likely) + Pessimistic
66Example:
Optimistic time is 10 weeksPessimistic time is 35 weeksMost likely time is 15 weeks
10+(4x15)+35 = 10+60+35 = 105 6 6 6
te = 17.5 weeks, or 18 weeks (rounded up) = 17.5 weeks, or 18 weeks (rounded up)
Expected TimeExpected Time
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© 2010, Dr. Kenneth F. Smith, PMP
The “PERT” Formula A Fundamental Flaw & Caution
Using the PERT formula to estimate activity duration, the probability the probability for completing the Activity on time for completing the Activity on time is only 50%is only 50%
In other words, at the outset, the Project Activity duration is under-under-estimated at least half of the timeestimated at least half of the time, so will most likely be overrun.
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© 2010, Dr. Kenneth F. Smith, PMP
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 Even Worse Worse than than PlayingPlaying
RUSSIAN ROULETTE !!!RUSSIAN ROULETTE !!!
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© 2010, Dr. Kenneth F. Smith, PMP
Russian Roulette “RR”
What is the Probability of SurvivingSurviving “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 isProbability of being killed is 1 / 6 = 17 %1 / 6 = 17 %
Thus Probability of SurvivingSurviving = 100% - Probability of Dying = 83%83%
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© 2010, Dr. Kenneth F. Smith, PMP
Russian Roulette “RR”
And the Probability of Surviving with:Three RoundsThree Rounds in the Chamber
= = 3 / 6 = 50 %3 / 6 = 50 %(i.e. the same odds as
the weighted-average PERT
3 time formula)
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© 2010, Dr. Kenneth F. Smith, PMP
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?
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© 2010, Dr. Kenneth F. Smith, PMP
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
2. Then add two standard deviationsadd two standard deviations to the activity duration
This will readjust the likelihood of completing the activity scheduled time to 95%95%
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© 2010, Dr. Kenneth F. Smith, PMP
Basic PERT/CPM Formula
Activity te = Activity te = opt + 4 ML + pess opt + 4 ML + pess 66
Activity Estimated Activity Estimated = = Standard DeviationStandard Deviation
pess - optpess - opt66
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© 2010, Dr. Kenneth F. Smith, PMP
NORMAL CURVE, RANGE, STANDARD DEVIATION,and RELATED PROBABILITIES
XX-1 SD +1 SD-1 SD +1 SD
-2SD +-2SD +2SD2SD
-3SD +3SD-3SD +3SD
68.26%68.26%
95.44%95.44%
99.74%99.74%
50%50%
-3 -2 -1 +1 +2 +3 -3 -2 -1 +1 +2 +3
0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13% 0.13% 2.15% 13.54% 34.13% 34.13% 13.5% 2.15% 0.13%
MEANMEAN
0 %0 % 100%100% 95%95%
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© 2010, Dr. Kenneth F. Smith, PMP
Ken Smith’s prescription for improving activity duration
estimates, & Project Scheduling
teterr = = opt + 4 ML + pessopt + 4 ML + pess + 2 Std. Devs+ 2 Std. Devs66
Realistic Activity TimeRealistic Activity Time
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© 2010, Dr. Kenneth F. Smith, PMP
Realistic Time Example
Optimistic TimeOptimistic Time = = 33 ; ; Most LikelyMost Likely = = 7 7 ; ; PessimisticPessimistic = = 2323
PERT te = 33 + 4(7) + 23 / 6 =
One Estimated Standard Deviation (ESD) = [23 – 3] / 6 = 3.33.3
So Two ESDs = 3.3 x 2 = 6.66.6THUS the “Realistic Activity Time” (with a 95% probability of attainment) = 9 + 6.6 = 15.6, or 16 rounded
(3 + 28 + 23) / 6 = 54 / 6 = 99
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© 2010, Dr. Kenneth F. Smith, PMP
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 !!!