July 31, 2006

"TAKING THE MYSTERY OUT OF ESTIMATING"

Estimating is one of the most controversial subjects in Project Management, particularly in the IT community. There are some people who have turned the subject into a cryptic science involving esoteric techniques bearing a close resemblance to "voodoo."

In reality, there is nothing magical to estimating whatsoever. It is simply a prediction of the amount of time and costs needed to complete a project, either in part or in full. Such a prediction is based on the facts as we know them at a given moment in time and should not be based on any cryptic estimating guidelines. True, guidelines can provide assistance in formulating an estimate, but the bottom-line estimate must be made by the human being. Let me explain why.

TIME AND TYPES OF ESTIMATES

First, we should look at time differently than what is commonly referred to as "man hours." Instead, we should be interested in the amount of time needed to directly perform a given task, which is referred to as "Direct Time." Interferences from our work effort, such as meetings and personal breaks, should also be noted, and referred to as "Indirect Time." Both "Direct" and "Indirect" make up what we call "Available Time" representing the total number of hours available to work in a day ("Unavailable Time" represents planned absences such as vacations). Under this scenario, estimates should be prepared in "Direct Hours" only. Yet, when we calculate schedules, we will consider the "Indirect Time."

We refer to the relationship between "Direct" and "Indirect" as an "Effectiveness Rate," which is expressed as a percentage representing the average amount of time in a day spent on direct assignments. This concept of time is derived from the construction industry in the 1950's. At the time, it was observed construction workers were 25% "effective" (in an eight hour day, the worker is doing two hours of direct work). We have employed this same technique in IT organizations around the world and have found they typically average a 70% "effectiveness rate" (approximately five direct hours in an eight hour day).

Two things need to be made clear: first, "Effectiveness Rate" varies from person-to-person and group-to-group; second, "Effectiveness Rate" is NOT an efficiency rating (for example, someone could have a low effectiveness rate yet be your most productive worker). I could go into more detail regarding the characteristics of time, but let's not digress.

EFFECTIVENESS RATE = DIRECT ÷ (DIRECT + INDIRECT)

Under the "PRIDE" Methodologies for IRM, there are two types of estimates serving different purposes. The "Order-of-Magnitude" (OOM) estimate is for an entire project and to make "go", "no-go" or "modify" types of project decisions. In contrast, the "Detail" estimate is for a given phase in a project and is an expression of the worker's personal commitment to the work.

TYPES OF ESTIMATES

	ORDER-OF-MAGNITUDE	DETAIL
PURPOSE	BASIS FOR PROJECT DECISIONS	EXPRESSION OF PERSONAL COMMITMENT
PREPARED BY	PROJECT MANAGEMENT OR PROJECT TEAM	INDIVIDUAL(S) ASSIGNED TO PERFORM THE WORK
WHEN PREPARED	END OF PHASE	BEGINNING OF PHASE
SCOPE	THROUGH THE END OF THE PROJECT	THROUGH THE END OF THE PHASE
LEVEL OF DETAIL	FOR ALL PHASES WITHIN A PROJECT	FOR ALL ACTIVITIES WITHIN A PHASE
SKILL LEVEL CONSIDERED	AVERAGE	UNIQUE TO WORKER

ALL ESTIMATES ARE EXPRESSED IN DIRECT TIME

Although "OOM" and "Detail" estimates serve different purposes, they are similar in many ways. For example, both are expressed in "Direct Hours" and both are based on a certain level of detail.

THE MORE WE KNOW, THE BETTER OUR ESTIMATE WILL BE

In construction, estimates are based on building or assembling materials in a project. To do so, architectural drawings (blueprints) are needed specifying the types of materials needed in the project, along with their dimensions. From this, we can calculate the amount of time necessary to assemble the materials in a prescribed sequence. We refer to this as "Bill of Materials" estimating for we are considering all of the parts in the product. The manufacturing industry follows an identical approach; as they design their product, they break it into its "bill of materials" and then calculate the amount of time needed to assemble them.

This same approach can be applied in the world of Information Resource Management (IRM). For example, when designing either a major system or a single program, consideration should be given to the "bill of materials" in the product to be produced, e.g., sub-systems, procedures, programs, modules, inputs, outputs, files, records, and data elements. Of these components, we must ask:

* How many resources do we have to create from scratch (new)?

* How many resources can we reuse without modification (shared resources)?

* How many resources are shared resources requiring modification and to what degree?

As an example:

IRM RESOURCE	NEW	MODIFY	RE-USE
SYSTEM	1
SUB-SYSTEMS	14
ADMIN PROC	23
COMP PROC	13
PROGRAMS	28
MODULES	33	10	112
INPUTS	17		5
OUTPUTS	37	13
FILES	56	5	43
RECORDS	250	50	306
DATA ELEMENTS	60		257

Of course we will have to consider the dimensions and scope of each resource (e.g., complicated or simple) but this "Bill of Materials" approach takes the mystery out of estimating. Too often estimates are missed simply because we do not understand the complexity of the product we are building. Inevitably, something is forgotten and the targeted estimate is missed. If we are to build some sort of estimating guideline, it should be based on the amount of time it takes to define a data element, design a file, etc. In other words, the estimating guidelines address the average amount of "Direct" time needed to create/modify/re-use an information resource. Coupled with this should be consideration for the skill level of the human resource charged with implementing the work. For example, an expert will perform a job faster than a novice. In an "OOM" estimate, we might not know who the human resources will be (we want to simply make a project decision) and, as such we might use an average skill level in our calculations.

One might ask, "How do we prepare an OOM estimate at the beginning of a project if we do not yet know the dimensions of a system; don't we have a 'Chicken and Egg' problem here?" The answer is No, you cannot. For any project, there must be an exploratory phase to determine the scope of the project; a "Feasibility Study" whereby requirements are specified and a complete "rough design" produced describing all of the resources in the design. Following this, one of the last activities of the Feasibility Study should then be to produce an OOM estimate for the remainder of the project.

COMMITMENT - THE REAL PROBLEM

There is a natural human tendency to avoid making estimates because they represent commitments, and people tend to shy away from commitments when they are not sure of the facts. Nevertheless, little progress would be made if we never attempted to plan for the future.

Under the "PRIDE" approach, it is the worker and not the manager, who prepares the "Detail" estimate for a specific phase in a project. As mentioned above, the worker considers the level of detail for the assignment (the "bill of materials") and then prepares an estimate to accomplish the work. For comparative purposes, the worker may also want to review the "OOM" estimate when preparing the "Detail" estimate.

When completed, the "Detail" estimate is reviewed with the Project Manager prior to acceptance. At this time, the worker must be prepared to rationalize the estimate. The Project Manager then has the option to:

* Accept the estimate as submitted.

* Ask it be to revised.

* Reject the estimate - the Project Manager may then decide to use another worker or reevaluate the assignment altogether.

Bottom-line, the Project Manager is seeking commitment from the worker to the project which is a very scary concept to some people today (particularly consultants). It means we must be responsible in the preparation of the estimate and professional in performing the work within the estimate.

Whereas the worker produces the estimate, the Project Manager calculates the schedule based on the worker's "effectiveness rate" (but I'll leave Project Scheduling to another time).

As the worker proceeds on an assignment, he/she posts time against the estimate and routinely updates the "Estimate to Do" (ETD) on their time sheet/screen representing the amount of time needed to complete a given assignment. If all goes well, the worker simply deducts the actual amount of time spent on an assignment against the estimate until it has been completed. However, if the assignment goes faster or slower than expected, the ETD should be updated accordingly which, in turn, signals to the Project Manager a change in the project schedule is needed.

Both the "Detail" estimate and "Estimate to Do" seek commitment from the worker and are an important part of the "PRIDE" Mini-Project Manager Concept where we try to manage "from the bottom-up, not just top-down"; for information, click HERE.

CONCLUSION

Estimating is actually not a complicated process. There are two considerations though: the degree of complexity in an assignment and the worker's commitment. The complexity issue is addressed by the "bill of materials" concept and the commitment issue is addressed by having the worker participate in the estimating process.

Estimating guidelines are helpful but they are not a panacea. The biggest danger with guidelines is when people abdicate commitment to the estimate via the guidelines. In other words, if the estimate goes sour, they blame the guidelines and not themselves, thus, the guidelines become a scapegoat for estimate failures. Regardless of how good your estimating guidelines are, they are just that: a "guideline." Guidelines don't make commitments, people do.

By the way, I despise the word "guesstimate" as this implies a simple guess without knowing all of the facts. Under the "PRIDE" approach to project estimating, this is simply not done.

For additional information on "PRIDE" Estimating, click HERE.

OUR BRYCE'S LAW OF THE WEEK therefore is...
"Most estimating errors are errors of omission, not commission. It is what we forget to estimate that gets us into trouble."

"BRYCE MANAGEMENT ANALYSIS" SERVICE INTRODUCED

We've just introduced a new free service for managers to perform a self-analysis of their style of management. Check it out at:

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NEW eBOOK: THE BRYCE IS RIGHT!

Folks, we've just released a new book on management entitled, "The Bryce is Right! Empowering Managers in today's Corporate Culture." This is a frank and candid description of the state of the art in management and includes essays on the problems in management today, along with some pragmatic advice on how to deal with them. Basically, this is a condensed course in management. As such, it is suited for managers, either those aspiring to become a manager or for those who need a refresher course. It will also be of interest to young people entering the work force, and is excellent for college curriculums.

Charles Cole of Lyndhurst, OH, said it is a "Very interesting book. Good work! It reminds me of some of the early works I read by W. Edwards Deming. Too bad the American corporate gurus of his day didn't pay him heed."

And Wolf Hager of Fort Myers, FL, says it is "A very impressive publication which requires careful reading and reminds me somewhat of Peter Drucker."

The price is just $20 plus tax. For more information on our book or to order on-line, see:

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We have also just produced a new one-day training program of the same name. For more information on both the eBook and course, please visit our web site at:

http://www.phmainstreet.com/mba/bryce1.htm

While there, look for our new MS PowerPoint presentation describing both the book and the training program.

IN OUR "DOWN THE ROAD" SECTION

The British Academy of Management will be holding their 2006 Conference at The Waterfront Hall and Hilton Hotel, in Belfast, Northern Ireland on September 12th-14th. For information, contact Clare Saunders in their London office at +44 (0)20-7383-7770 or visit their web page at: http://bam.ac.uk/

The Society for Information Management will be holding their SIMposium 2006 on September 17-20 at the Fairmont Hotel in Dallas, Texas. For information, contact SIM headquarters in Chicago at 312/527-6734

Verify 2006, the International Software Test Conference, will be held October 10th-11th in Washington, DC at the Crown Plaza Hotel Crystal City. For information, call 703/725-3051.

The International Institute of Business Analysis will be holding their Business Analyst World conference at the Boston Marriott in Burlington, MA on October 30th through November 2nd. This will be followed by a similar meeting in Chicago, IL at the Crowne Plaza O'Hare on November 13th - 16th. For information contact the IIBA at 888/443-6786 x 228 or visit their web site at: http://iiba.com/

If you have got an upcoming IRM related event you want mentioned, please e-mail the date, time and location of the event to timb001@phmainstreet.com

FRAPPER MAP

Friends, I don't know if you've seen it yet, but we've added a Frapper map to the "Management Visions" web site. Frapper is a free mapping service offered by the folks at Rising Concepts, LLC, and allows you to plot yourself on a worldwide map. This is a great way to keep track of our listeners and I encourage you to try it out through our web page or by clicking HERE.

MY "PET PEEVE OF THE WEEK" IS "WANTS & NEEDS"

Advertising and marketing people have long understood the difference between "wants and needs." Interestingly, most people don't. Let me give you an example, most people "need" basic transportation to get them to and from work each day; something that is easy to maintain and has good gas efficiency. But what they "want" is something lavish or sporty; and something that is ultimately expensive to maintain and operate. We see plenty of examples of this in just about all walks of life. We particularly see this in the electronics industry where we want to get the latest technical gadget. We also see it in the housing industry, the health and fashion industries, as well as every consumer oriented product.

As I said, advertisers primarily deal in creating consumer "wants" by playing with our emotions. Doctors, repairmen, and other maintenance people primarily address consumer "needs." In other words, they are charged with delivering the brutal reality of the situation to you. They're not so much concerned with fluff as much as they are with telling you matter-of-factly there is something wrong, and here is what you "need" to do.

I see this same phenomenon in the IT world. For example, proponents of "Agile Methodologies" create "want" situations by promising to cure a variety of development woes. This is essentially no different than anyone else who has come along with the latest panacea du jour. In reality, people need nothing more than some simple discipline, organization, and accountability; you know, management. But I guess this isn't considered cool anymore.

I think what people in the IT industry "want" is some magical product that reads people's minds, draws up designs, and automatically programs them accordingly. You know what? That's never going to happen. Just as it is never going to happen in engineering, manufacturing, and architecture. We're always going to need people to analyze problems, specify and review requirements, create designs, and implement accordingly. Its been done this way for centuries and I don't see it changing any time soon. I'm sorry but the design process represents work, and the sooner we start managing this effort, the better we'll be.

In a way, it kind of reminds me of the diet craze. We all know that in order to lose weight, we "need" to watch what we eat and get some exercise. But instead, we invest millions in miracle diet drugs, diet books, and fancy exercise equipment, all promising miraculous results. What we "want" is the most painless path possible; but what we "need" is a good swift kick in the rear end.

Such is my Pet Peeve of the Week.

NEW "PRIDE" eBOOK & AUDIO BOOK

We're pleased to announce the release of a new book on our "PRIDE" Methodologies for IRM. Actually, we've created two versions of the same book, an eBook version (in PDF format), and an Audio Book (in MP3 format). Both compliment the Internet version available through our corporate web site. The eBook version is 363 pages in length and includes full tutorials on Enterprise Engineering, Systems Engineering, Data Base Engineering, and Project Management, complete with examples and a quick navigation to guide you through the book. The Audio Book is an abridged version which includes over nine hours of audio. The eBook version is priced at $49 plus tax, the Audio Book is priced at $54 plus tax, and a discounted packaged price for both is $93 plus tax. The book is excellent for both corporate developers as well as at the university level where it complements a college curriculum.

Summers Hagerman of Cincinnati says, "This book provides management with a complete set of powerful tools for managing the largest information systems projects."

Check it out at:

http://www.phmainstreet.com/mba/pridebk.htm

AND FINALLY...

I received an e-mail from a Hugh Connell in Montana who wrote me regarding last week's essay entitled, "A Tale of Two Projects."
Hugh writes:

"Wow, I thought you were describing my company. The squeaky wheel phenomenon seems to get around and isn't fair. Can anything be done about it? "

Thanks Hugh for your note,

Thanks Hugh for your note,

First, you're right, the squeaky wheel phenomenon is most definitely not fair. I've seen this first hand in many shops. People who were calmly and professionally going about their business, meeting project deadlines, and quietly and peacefully implementing systems, were losing out to a bunch of boisterous clods who couldn't make a deadline to save their life. Yet, their visibility garners them attention. I guess this is an example of a little bullshit goes a long way.

What can be done about it? The only thing we can do is try to raise the consciousness of management so that they are not so easily fooled by such shenanigans.

Again, Thanks for your e-mail. Keep those cards and letters coming.

MBA is an international management consulting firm specializing in Information Resource Management. We offer training, consulting, and writing services in the areas of Enterprise Engineering, Systems Engineering, Data Base Engineering, Project Management, Methodologies and Repositories. For information, call us at 727/786-4567. For a complete listing of my essays, see the "PRIDE" Special Subject Bulletins section of our corporate web site.

Our corporate web page is at:

http://phmainstreet.com/mba/

Management Visions is a presentation of M. Bryce & Associates, a division of M&JB Investment Company of Palm Harbor, Florida, USA. The program is produced on a weekly basis and updated on Sundays. It is available in versions for RealPlayer, Microsoft Media Player, and MP3 suitable for Podcasting. See our web site for details. You'll find our broadcast listed in several Podcast and Internet Search engines, as well as Apples' iTunes.

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Copyright © 2006 by M&JB Investment Company of Palm Harbor, Florida, USA. All rights reserved. "PRIDE" is the registered trademark of M&JB Investment Company.

This is Tim Bryce reporting.

Since 1971: "Software for the finest computer - the Mind."

END