Project Management - Rutgers Business School (New Brunswick)

CH 1: Project - Definition (PMI Version)

A temporary endeavour to produce a unique product or service.

CH 1: Project vs. Operations (Projects)

SIMILARITIES:

Planned, executed, controlled. Performed by people Resource constrained.

PURPOSE:

Attain objectives and terminate.

TIME:

Temporary. Definite beginning & ending.

OUTCOME:

Unique product, service, or result.

PEOPLE: dynamic temp teams generally not aligned with org structure

AUTHORITY OF MANAGER:

varies by org structure, generally minimal line of authority

CH 1: Project vs. Operations (Operations)

SIMILARITIES:

Planned, executed, controlled. Performed by people Resource constrained.

PURPOSE:

Sustain the organization.

TIME:

Ongoing

OUTCOME:

Non-unique product, service, or result.

PEOPLE:

Functional teams generally aligned with org structure

AUTHORITY OF MANAGER:

generally formal direct line of authority

CH 1: Project Management:

...applying both the science & art to planning, organizing, implementing, leading and controlling the work of a project

...the process of defining a project, developing a plan, executing the plan, overcoming obstacles, managing risks, and taking corrective actions

...the process of managing the competing demands & trade-offs between the desired results of the project (scope) vs. natural constraints (time and cost)

...the process of leading a team.

CH 1: Project Management - Definition (PMI Version)

The application of knowledge, skills, tools and techniques to project activities to meet project requirements.

…additional: a set of 5 process groups and knowledge areas in its PMBOK (project management body of knowledge)

CH 1: The Project Management Institute also defines project management as

a set of five process groups and ten knowledge areas in its PMBOK guide.

#1: Initiating

#2: Planning

#3: Executing

#4: Monitoring & Controlling

#5: Closing

CH 1: Description Project Management Process Groups:

#1: INITIATING:

Kicking off

#2: PLANNING:

Defining, developing the plan

#3: EXECUTING:

Coordinating, making it happen

#4: MONITORING & CONTROLLING

Tracking progress, staying on course

#5: CLOSING:

Transition, closeout

CH 1: PMBOK Knowledge Areas

-Project Integration Management

-Project Scope Management

-Project Time Management

-Project Cost Management

-Project Quality Management

-Project HR Management

-Project Communications Management

-Project Risk Management

-Project Procurement Management

-Project Stakeholder Management

CH 1: Project Management - Value Proposition:

-Organizational Value

-Individual Value

CH 1: Value Proposition - ORGANIZATIONAL VALUE:

-Controlled way to rapidly respond to changing market conditions (opportunities & threats)

-Maximizes the innovative / creative capabilities of the organization

-Organizations can accomplish more with less

-Better leverage of both internal and external expertise

-Greater level of stakeholder acceptance for change

-$$$ - poor project investments are "killed-off" early

CH 1: Value Proposition - INDIVIDUAL VALUE:

-Ensures that our work is put to the best use for the organization and properly recognized

-Career path with challenging opportunities

-Career path that allows us to leverage all of our abilities and knowledge (business, people, technical skills)

-Prepares you for leadership positions

-Allows you to have major impact on company's future

• CH 1: Project Management - Challenges:

-Uncharted territory

• --Each project unique

-Multiple expectations

• --Multiple stakeholders

-Communication obstacles

• --Natural organizational boundaries

-Cutting edge

• --(unique = innovative = unknowns = risks)

-Collaboration

• --Molding the team

-Estimating work

• --Uniqueness issue

-Balancing competing demands

• --"Triple constraint"

CH 1: Project Management - Challenges: TRIPLE CONSTRAINT:

"Triple Constraint" - every project must:

-Produce deliverables (Scope)

-Within a defined time period (Time)

-Under an approved budget with specified resources (Cost)

(Refer to Chapter 1 - Slide 20 for triangle diagram.)

CH 1: Project Management - Recent Trends:

-Vendor management

-Quality management

-Risk management

-Change agent

-Management of

--Virtual teams

--Cross-functional teams

--Multi-cultural teams

Project management recent trends

-cybersecurity threats

-HIPAA privacy compliance

-social media

-PM collab tools

-servant leadership

CH 2: Project Stakeholders:

-Anyone who could impact or be impacted by the project

-Stakeholders can be individuals, groups of people, or entire organizations that are involved in the project or whose interest might be affected by the project

CH 2: Project Managers - Key Roles - PLANNER

-Ensures project is well defined, resources available

-Processes in place for execution & control

CH 2: Project Managers - Key Roles - ORGANIZER

-Determines complete work effort

-Sequence of activities, due dates, assignments, costs

CH 2: Project Managers - Key Roles - point person

-Point-of-contact for all project communications

CH 2: Project Managers - Key Roles - QUARTERMASTER

-Ensures proper resources, materials, facilities

CH 2: Project Managers - Key Roles - OTHER KEY ROLES

FACILITATOR:

-Links stakeholders & project team members

PERSUADER:

-Gains agreement from stakeholders

-Manages expectations, forces resource decisions

PROBLEM SOLVER:

-Uses full background to resolve issues

"THE UMBRELLA"

-Shields team from politics and "noise"

"THE POLICE OFFICER"

-Continuously measures progress against plan, corrective actions

COACH

-Motivates, improves skills, provides feedback

"THE BULLDOG"

-Master of follow-up

LIBRARIAN

-Manages all information, communication

"INSURANCE AGENT"

-Continuously identifies risks and mitigation

SALESMAN

-Change agent, team inspiration

• CH 2: Project Managers - KEY SKILLS

Project Management Fundamentals:

• -"science" of project management

• -Software, MS Project

Business Management Skills:

• -Same skills as operations manager

• -Budgeting, finance, purchasing, coaching

• -Performance management

Technical Knowledge:

• -Experience and competence in focal area of project

• -Credibility

Communication Skills:

• -PMI regards as most important skill

• -Written / oral / presentation skills

• -"active listening"

Leadership Skills:

• -General people skills

• -Adaptability, flexibility, problem solving

• -People management, "big picture"

CH 2: Project Managers - Qualities for Success

Takes Ownership:

• -Responsibility & accountability

• -Leads by example

Savvy:

• -Understands people & org.

• -Internal politics

• "Intensity with a Smile"

• -Assertive, tenacious, results-oriented

• -Still accessible

"Eye of the Storm":

• -Calm during chaos

• Strong Customer-Service Orientation

• -Sees each stakeholder perspective

• -Facilitation, collaboration

• "People-focused"

• -Team-oriented approach

Always Keep "Eye on the Ball"

• -Stays focused on project goals & objectives

• "Controlled Passion"

• -Passionate about project

• -Detached for better perspective

"Healthy Paranoia"

• -Positive outlook for project success

• -Assumes nothing, verifies everything

• "Context" Understanding

• -Where does project "fit" in company

"Looking for Trouble"

• -Risks, issues, obstacles

CH 2: Project Managers - COMMON MISTAKES

-Not clearly understanding how or ensuring project is aligned with organizational objectives

-Not properly managing stakeholder expectations throughout project

-Not gaining agreement and "buy-in" on project goals and success criteria from key stakeholders

-Not developing a realistic schedule that includes all work efforts, tasks, estimates, resource requirements

-Not getting "buy-in" and acceptance on project schedule

-Not clearly deciding and communicating who is responsible for what

-Not utilizing change control procedures to manage the scope of the project

-Not communicating consistently and effectively with all key stakeholders

-Not executing the project plan

-Not tackling key risks early in the project

-Not proactively identifying risks and developing contingency plans for those risks

-Not obtaining the right resources with the right skills at the right time

-Not aggressively pursuing issue resolution

Inadequate requirements definition and management

-Insufficient management and leadership of project team

CH 3: Essential elements of Project Management (SUCCESS or FAILURE):

Refer to Chapter 3, Slides 1 - 25 for great examples.

CH 3: Project Management - SUCCESSFUL PROJECTS:

-Difficult to define

-Lack of universal agreement on what project success looks like

-Acceptance and success criteria are often never established and agreed to

-Some projects are called successful even when they fail to meet textbook criteria (schedule, cost, expectations)

-A "cancelled" project may be called successful

CH 3: The Ultimate Successful Project:

-Delivered as promised

-Completed on-time

-Completed within budget

-Delivered quality

--Functional, performance, quality specs

-Achieved original purpose

-Met all stakeholder expectations

-Maintains "win-win" relationships

--"people-focus"

CH 3: Project Management - "Less-Than" Successful Projects

Less-than successful (or "troubled") projects can generally be classified in one of two groups:

-ORGANIZATIONAL-LEVEL ISSUES

-PROJECT-LEVEL ISSUES

CH 3: Project Management - COMMON REASONS FOR TROUBLED PROJECTS:

Refer to Chapter 3, Slides 29-32 for more information.

CH 3: Project Management - SUCCESSFUL PROJECTS -

COMMON TRAITS:

-Project is aligned with organizational goals

-Project has effective management support

-Project has effective leadership

-All key stakeholders are in agreement on the purpose, goals, and objectives of the project

-All key stakeholders share a common vision on the project results

-All key stakeholders share realistic expectations for the project results

-The project results meet the expectations of the key stakeholders

-Stakeholder expectations are constantly managed and validated throughout the project

-There is an investment made in proper planning

-The project scope, approach, and deliverables are clearly defined and agreed upon during planning

-Project issues and action items are aggressively pursued

-There is a strong sense of collaboration and teamwork

-Expectations and changes surrounding scope, quality, schedule, and cost are closely managed

-Project team proactively identifies risk and determines mitigation strategies to reduce project exposure

-Project resources are skilled and available when needed

CH 3: Essential Project Manager Toolkit - Core Tools - PROJECT DEFINITION DOCUMENT:

DESCRIPTION:

-Defines project purpose, objectives, success criteria, and scope statement

VALUE:

-Key for managing expectations and controlling scope

CH 3: Essential Project Manager Toolkit - Core Tools - REQUIREMENTS DOCUMENT:

DESCRIPTION:

-Defines the specifications for output of the project

VALUE:

-Key for managing expectations and controlling scope.

CH 3: Essential Project Manager Toolkit - Core Tools - PROJECT SCHEDULE:

DESCRIPTION:

-Shows all work efforts, properly estimated, assigned to responsible resources scheduled against a calendar.

VALUE:

-Key for directing all project team work efforts.

CH 3: Essential Project Manager Toolkit - Core Tools - PROJECT LOG:

DESCRIPTION:

-Captures key info for each project risk, issue, action item, and change request

VALUE:

-Ensures proper visibility, tracking, and reporting.

CH 3: Essential Project Manager Toolkit - Core Tools - CHANGE REQUEST FORM:

DESCRIPTION:

-Captures key info for any requested change that impacts scope, schedule, or budget.

VALUE:

-Allows change item to be properly evaluated before action is taken.

CH 3: Essential Project Management Tools - OTHER

-Project charter

-Status reports

-Milestone chart

-Project organization chart

-Responsibility matrix

-Communication plan

-Quality management plan

-Staffing management plan

-Risk response plan

-Project plan

-Deliverable summary

-Project notebook

CH 4: Project Definition:

Project definition is the most important step in putting a project plan together

It builds the foundation for all other project management activities

CH 4: Project Definition Continued:

-Also called Project Charter, Statement of Scope

-Developed by PM or management

-Helps the PM understand the project boundaries and parameters

-Time invested should mirror project size

-General guideline:

--20% of total project duration should be spent on project definition & planning

CH 4: Project Definition vs. Project Planning

-Project definition is the first step of project planning

-Before you develop a detailed project plan, you need to know the boundaries of the project

-Need to know stakeholders are all "on-board" with the project mission (purpose, goals, objective, success criteria)

-Project definition - WHAT WE WILL DO, WHO WILL BE INVOLVED

-Project planning - HOW THE WORK WILL BE DONE

CH 4: Project Charter: (NIB)

-Project charter is the official, written acknowledgement that a project exists and resources will be committed to it

-PMBOK ---> A document that formally authorizes the project or phase. It should include the business need of the project and the product description

-Broad high-level overview of the project

-Executive summary

-Should be broad - won't need to change

-Issued by project sponsor (high-level)

CH 4: Project Charter - Summary (cont.) (NIB)

-Gives the PM authority

-Formally recognizes the project

-States the project goals & objectives

-Commits the organization's resources to the project

-When charter is approved, work on the project can begin

CH 4: Project Statement of Work (NIB)

-The SOW is a narrative description of products or services to be supplied by the project

-Business need - describes how the project will solve a business problem or exploit a business opportunity

-Product scope description - should show the relationship between the product and the business need the project will meet

-Strategic plan - should document which strategic goals the project will help achieve

CH 4: Project Definition Document - PURPOSE

-Should answer the "why?"

-What business problem is being solved?

CH 4: Project Definition Document - GOALS & OBJECTIVES:

-What are we going to accomplish?

-Targeted outcomes for the project

CH 4: Project Definition Document - SUCCESS CRITERIA:

-List measurable, verifiable results

-"What does success look like?"

CH 4: Project Definition Document - PROJECT CONTEXT

-How does this project fit?

CH 4: Project Definition Document - PROJECT DEPENDENCIES:

-Documents any dependencies that could impact project

CH 4: Project Definition Document - SCOPE SPECIFICATIONS:

-High-level breakdown of goals and objectives

CH 4: Project Definition Document - OUT-of-SCOPE SPECIFICATIONS:

-Clearly indicate what is "in" and what is "out"

CH 4: Project Definition Document - ASSUMPTIONS:

-List relevant assumptions

CH 4: Project Definition Document - CONSTRAINTS:

-Any business event, schedule, budgetary, resource, or technical factor that could impact project

CH 4: Project Definition Document - RISKS:

-List all risks, likelihood, mitigation strategy

CH 4: STAKEHOLDERS

-All stakeholders, their role, how they inter-relate

CH 4: RECOMMENDED APPROACH:

-Describe the intent of the project

CH 4: Project Definition Checklist - GENERAL:

-Is it clear why this project is being undertaken?

-Is there a clear picture of the desired results?

-Is there a clear picture of how this project fits within the organization?

-Do you understand who is funding the project?

-Is there a gap between available and required funds?

-Have success factors been identified?

CH 4: Project Definition Checklist - SCOPE:

-Is project scope defined clearly enough to identify "scope creep?"

-Does scope indicate boundaries between impacted processes and systems?

-Have all project constraints been identified?

-Have all assumptions been identified?

-Does scope include out-of-scope items?

-Has process workflow been considered?

CH 4: Project Definition Checklist - STAKEHOLDERS:

-Has the project sponsor been identified?

-Is the impacted business process represented on the project team?

-Is each customer group represented?

-Are all stakeholders identified in an org chart?

-Are the reporting relationships indicated?

-Are project roles described and assigned to each stakeholder?

-Have we identified which stakeholders will need to approve any project changes?

CH 4: Project Definition Checklist - OTHER/ACCEPTANCE:

-Have risks and responses been planned?

-Has preliminary timeline and budget been stated?

-Have all stakeholders reviewed and approved the Project Definition document?

-Has the project and the project manager been officially authorized?

CH 4: Project Definition Document - RUTGERS NATIONAL CHAMPIONSHIP PROJECT EXAMPLE:

-Project Name:

--National Championship Project

-Purpose:

--Bring fame and notoriety to Rutgers University

-Scope

--Covers all football activities during the season

-Goals & Objectives:

--Win college football National Championship

-Success Criteria:

--Undefeated regular season

--#1-4 in final regular season Poll

--Win playoff championship game

-Assumptions:

--Rutgers continues funding football program

--Head coach remains at school

--Recruiting continues to improve each year

-Constraints:

--Athletic budget

--State funding

-Risks:

--Coaching staff turnover

--Athletic funding is reduced

--Key player injuries

--Recruiting drop-off

-Stakeholders:

--Rutgers President / Board

--Head coach and team

--Student body

--NJ residents

-Out-of-Scope:

--Player graduation rates

--Revenue vs budget

CH 5: Project Stakeholders

-Anyone who could impact or be impacted by the project

-Stakeholders can be individuals, groups of people, or entire organizations that are involved in the project or whose interest might be affected by the project

-Stakeholder influence is highest at beginning of project

CH 5: Planning a Project

In planning a project, focus is on how the work will be done

How will the deliverables be developed?

How will the project be managed?

-Project planning involves

--Work tasks

--Resources

--Schedule & costs

CH 5: Key Project Planning Principles (NIB) - PROGRESSIVE ELABORATION:

-Continuously improving and detailing a plan as more detailed and specific information and more accurate estimates become available as the project progresses

CH 5: Key Project Planning Principles

-PURPOSE

--develop a plan that enables the project to be executed and controlled

-MULTIPLE PASSES REQUIRED

--Not a one-time activity, needs adjusting

-PROJECT PLAN IS NOT MS PROJECT FILE

-PROACTIVE PROJECT MANAGEMENT

--Effective planning enables proactive project management

-"STAY DOWN FROM THE MOUNTAIN"

--Project planning should be done collaboratively

CH 5: Project Planning - Important Questions

-How exactly will the deliverables be produced?

-What work tasks need to be performed?

-Who will perform the work?

-What resources will we need?

-When will the work occur?

-How long will it take to perform the work?

-When will the work be done?

-How much will the project cost?

CH 5: Project Planning - Important Questions (Continued)

-What skills are needed for each role?

-How will changes be controlled?

-How to keep stakeholders informed, feedback?

-How will issues be tracked?

-What are the risks, mitigation?

-How will the project team be managed?

-Does this plan allow for execution and control of the project?

CH 5: Building a Project Plan

-VALIDATE PROJECT DEFINITION

--re-validate the business case

-DETERMINE WHAT NEEDS TO BE DONE

--What are the deliverables?

-DETERMINE ACCEPTANCE CRITERIA

--What does success look like?

-DETERMINE RESOURCE NEEDS

--Type and quantity of resources

-ACQUIRE RESOURCES

--Internal vs. external

CH 5: Building a Project Plan (Continued)

-ESTIMATE THE WORK EFFORT

--Duration for each activity

-DEVELOP THE SCHEDULE

--Use resource and work estimates

-UPDATE ROLES & RESPONSIBILITIES

--Map responsibility of each role

-UPDATE PROJECT ORGANIZATION

--Determine project costs and budget

-PLAN FOR CHANGE

--Procedure for key changes (scope, time, cost, quality)

CH 5: Building a Project Plan (Continued 2)

-DETERMINE PROJECT CONTROL SYSTEM

--How will performance be measured, reported?

-PLAN FOR ISSUES

--How do we escalate?

-PLAN FOR QUALITY

--What are quality standards for deliverables?

-PLAN FOR COMMUNICATIONS

--How to communicate to stakeholders?

-PLAN FOR TEAM MANAGEMENT

-PLAN FOR PROCUREMENT

CH 5: Project Plan Checklist

-Have all questions in Project Planning been answered?

-Have you reviewed work effort estimates, project schedule, and budget?

-Has the project plan been reviewed and approved?

-Was the project plan signed-off?

CH 6: Work Breakdown Structure (WBS) Definition

A WBS is a logical breakdown and representation of the work required by the project

CH 6: Work Breakdown Structure

A WBS is a logical breakdown and representation of the work required by the project

--An organized task list

--Shows the work and interim deliverables

-IT CAN BE GRAPHICAL

--Best for communicating upwards

-IT CAN BE AN OUTLINE

--Best to capture details needed for cost and schedule development

CH 6: Benefits of a good WBS:

A good WBS allows you to do a better job with other detail project planning activities:

--Identifying resources

--Identifying risks

--Getting better estimates

--Building a realistic schedule

--Developing an accurate budget

A good WBS also allows better management of stakeholder expectations!

CH 6: Key Differences Between WBS & Project Schedule:

-TASK ASSIGNMENTS

--WBS doesn't show who is assigned

--Project schedule shows work assignments

-SCHEDULED TASKS

--WBS doesn't show when tasks occur

--Project schedule shows start and end dates

-TASK DEPENDENCIES

--WBS doesn't show them

--Project schedule does show them

CH 6: WBS Process

-FIRST IDENTIFY THE MAJOR COMPONENTS OF WORK

--Usually 5-10 major work groups

-IDENTIFY THE NEXT LEVEL OF WORK (LEVEL 2)

--Indented lists or organization chart graph

-CONTINUE TO BREAK DOWN EACH LEVEL 2 ITEM

--Details under some may need to be broken down further

CH 6: WBS Process (Example: Building a House):

-Level 1 - Phases

-Level 2 - Deliverables / Milestones

-Level 3 & 4 - Activities / Tasks

CH 6: WBS Process (Steps to remember)

-REMEMBER - COLLABORATIVE PROCESS

-REMEMBER - MISSING TASKS:

--Project planning

--Approval cycles

--Customer interface

--QA inspections / fixing defects

--Training

--Project reviews

--Project closing

CH 6: Why is the Work Breakdown Structure Important?

-MANAGE THE PIECES

--how do you eat an elephant?

-BETTER ESTIMATES & PLANNING

--Improves accuracy of cost, duration, resources

-BETTER CONTROL

-CLEAR RESPONSIBILITIES

--Work assignments are designated

-BETTER WORK DEFINITION, FEWER CHANGES

--Identifies all necessary work for project

--Minimizes "I didn't think of that"

CH 6: Why is the Work Breakdown Structure Important? (Continued)

-STAKEHOLDER BUY-IN ON SCOPE

--Facilitates understanding of required effort

-TIGHTER MANAGEMENT INTEGRATION

--Ties work directly to schedule, budget, resources

-BETTER TEAM PERFORMANCE

--Each team member sees how they "fit"

-RISK FACTORS IDENTIFIED EARLY

--By breaking down tasks, easier to see risks

-CONFIDENCE INCREASES

--Formal structure provides confidence & comfort

CH 6: Guidelines for Effective Work Breakdown Structures

-All the work of the project is included in the WBS

-WBS should focus on deliverables

-WBS is refined as the project progresses

-WBS is a top-down decomposition and is logical - summary tasks go with lower level tasks

-WBS should be organized to emphasize the most important aspects of the project

CH 6: Guidelines for Effective Work Breakdown Structures (Continued)

-Unique identifiers are assigned to each item in WBS for better reporting of costs & resources

-Review and refine WBS until all key stakeholders are satisfied

-Upper levels of the WBS represent major deliverables or project phases

-WBS should include project management tasks and activities

CH 6: Guidelines for Effective Work Breakdown Structures (Continued 2)

-WBS should account for any subcontracted or externally committed deliverable

-WBS should represent all work needed to ensure completeness, correctness, and acceptance of deliverables

-Ensure adequate depth of WBS

--Factor in amount of project risk

--Reporting requirements

--Balance of control vs. costs

CH 6: WBS - Knowing When to Stop (NIB)

-100% RULE

--The sum of the work in low-level deliverables can be rolled up to the next higher deliverable with no gaps or missing work

-8-80 RULE

--The deliverable can be completed in no less than 8 and no more than 80 hours of effort

-SINGLE POINT OF RESPONSIBILITY RULE

--The deliverable can be assigned to a single point of responsibility for accomplishment

-ADEQUATE FOR ESTIMATING RULE

--The deliverable can be described in enough detail to enable reliable estimates of time and cost

CH 6: (NIB) - 100% rule

The sum of the work in low-level deliverables can be rolled up to the next higher deliverable with no gaps or missing work

CH 6: (NIB) - 8-80 rule

The deliverable can be completed in no less than 8 and no more than 80 hours of effort

CH 6: (NIB) - Single point of responsibility rule

The deliverable can be assigned to a single point of responsibility for accomplishment

CH 6: (NIB) - Adequate for estimating rule

The deliverable can be described in enough detail to enable reliable estimates of time and cost

CH 6: WBS - Knowing When to Stop

-In general, the more detail in the WBS, the more accurate the work estimates and the better level of control

-TRADE-OFF

--Too much detail = excessive data collection costs

--Too little detail = higher risks and inability to manage

CH 7: Estimating the Work:

What do we need to provide an estimate?

A) Identify the work required

B) Identify the resources needed

DON'T FORGET RISKS

(Refer to Chapter 7, Slide 4 if you would like to see the diagram showing where Estimating fits in the process. I.E.: Cost, Schedule, Estimating, WBS)

CH 7: Estimating the Work: (WBS):

(Baking a Cake example)

-Baking a Cake

--Preheat oven to 350 degrees

--Grease cake pan

--Mix cake mix, water, eggs, veg. oil in large bowl

--Pour batter into prepared pan

--Bake cake

CH 7: Estimating the Work: (WBS): Continued:

(Baking a Cake example)

-Baking a Cake

--Preheat oven to 350 degrees (10 min)

--Grease cake pan (2 min)

--Mix cake mix, water, eggs, veg. oil in large bowl (2 min)

--Pour batter into prepared pan (1 min)

--Bake cake (25 min)

--Total Time? (30 min or 40 min?)

RISKS

--Oven temperature is slightly off - takes longer to bake

--Ingredients take longer to mix

--Add extra time (5 min) - (30 min or 35 min or 40 min or 45 min?)

CH 7: Cost Estimates (NIB) - ROM:

RANGE OF ACCURACY:

-50% to +50%

PHASE

Initiating

CH 7: Cost Estimates (NIB) - DEFINITIVE ESTIMATE:

RANGE OF ACCURACY:

-10% to +10%

PHASE:

Planning

CH 7: Reasons for Estimating Woes

-IMPROPER WORK DEFINITION

--Lack of detail, understanding standards

-WRONG PEOPLE ARE ESTIMATING

--Management vs. SME's

-POOR COMMUNICATION

--Not sharing info with estimator, stakeholders

-WRONG TECHNIQUE USED

--"ballpark" estimates vs. bottom-up

--Not asking for range, similar experiences

CH 7: Reasons for Estimating Woes (continued)

-RESOURCE ISSUES

--Estimator is sub-standard

-LACK OF CONTINGENCY

--Risk factors not accounted for in estimates

-MANAGEMENT DECISIONS

--Budget commitment on initial high-level estimate

--Not willing to invest in bottom-up approach

--Estimates based on what mgmt wants to hear

--Request a reduced estimate to meet budget

--Accepts project for less than estimated cost

CH 7: Estimating Techniques & Methods:

There are several key estimating techniques and methods (p. 99 & 100):

Bottom-up estimating

Expert judgement

Weighted-average

-Many of these are mathematical-based

-Many seek to identify project risk factors

CH 7: Estimating Tools & Techniques (NIB) - ANALOGOUS ESTIMATING:

-An estimating approach of gross value based on a top-down view of the project. This method relies heavily on expert judgement and similarity between current and past projects.

-This approach is typically used early in the project when information is limited and details are not fully known.

-The estimate that is developed is called top-down because it is an estimate for the overall project or phase.

CH 7: Estimating Tools & Techniques (NIB)

-EXPERT JUDGEMENT

--This technique is based on historical information about similar projects

-BOTTOM-UP ESTIMATING

--Start with the details and work your way up to the total.

--More accurate & expensive

--This technique not used during Initiating phase because these details are not yet known

CH 7: Estimating Tools & Techniques (NIB) - PARAMETRIC ESTIMATING:

-A technique that employs one or more cost-estimating relationships and associated mathematical relationships and logic.

-The cost & accuracy to produce a parametric estimate can vary widely based on the complexity of the project and parameters.

-Most accurate when:

--The parameters are readily quantifiable

--Close relationship between parameters & cost

--Historical info is available & accurate

CH 7: Estimating Tools & Techniques (NIB) - PARAMETRIC ESTIMATING EXAMPLE:

-You are building a house. You need to estimate the costs for the foundation. You have the following data: 30 cubic yards (CY) of soil to be removed, 2600 pounds of steel rebar to be installed, and 20 CY of concrete to be placed. Over many projects of this size, you have a good idea of the following costs:

--Soil removal costs $100/CY

--Steel rebar costs $1.50/pound installed

--Concrete costs $400/CY placed

-Calculate how much the foundation will cost using the parametric estimating method