THE ESTIMATING PROBLEM Barbara just received the good news: She was assigned as
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THE ESTIMATING PROBLEM Barbara just received the good news: She was assigned as the project manager for a her company won as part of competitive bidding. Whenever a request for proposal (REP into Barbara's company, a committee composed mainly of senior managers reviews the decision is made to bid on the job, the RFP is turned over to the Proposal of the Proposal Department is an estimating group that is responsible for estimatin If the estimating group has no previous history concerning some of the deliverables packages and is unsure about the time and cost for the work, the estimating team w the functional managers for assistance with estimating project g all work work ill then ask Project managers like Barbara do not often participate in the bidding process. Ususalh their first knowledge about the project comes after the contract is awarded to their compar and they are assigned as the project manager. Some project managers are highly optimistic and trust the estimates that were submitted in the bid implicitly unless, of course, a significant of time has elapsed between the date of submittal of the proposal and the final contract award date. Barbara, however, is somewhat pessimistic. She believes that accepting the estimates they were submitted in the proposal is like playing Russian roulette. As such, Barbara prefer to review the estimates. One of the most critical work packages in the project was estimated at twelve weeks using one grade 7 employee full time. Barbara had performed this task on previous projects and i required one person full time for fourteen weeks. Barbara asked the estimating group how they arrived at this estimate. The estimating group responded that they used the three-point estimate where the optimistic time was four weeks, the most likely time was thirteen weeks, and the pes- simistic time was sixteen weeks Barbara believed that the three-point estimate was way off of the mark. The only way that this work package could ever be completed in four weeks would be for a very small project nowhere near the complexity of Barbara's project. Therefore, the estimating group was not con- sidering any complexity factors when using the three-point estimate. Had the estimating group used the triangular distribution where each of the three estimates had an equal likelihood od occurrence, the final estimate would have been thirteen weeks. This was closer to the fourteen weeks that Barbara thought the work package would take. While a difference of 1 week seems small, it could have a serious impact on Barbara's project and incur penalties for late deliner 1. 02010 by Harold Kerzner. Reproduced by permission. All rights reserved.Explanation / Answer
Before we get into the details of the case, let us first understand what does estimation means in project management. Estimation is the process of finding how much time, money and resources will be consumed to finish a project. The project usually involves building a system or a product. When a project manager have incomplete or uncertain values, he can make use of various estimation techniques to arrive at approximate values needed to commence the project.
Now, talking about the given case:
Ans.1) The primary estimation techniques discussed in the given case are;
Both of these estimating techniques have their own advantages and disadvantages. It depends upon the need of the project and the understanding of the project manager to decide which estimation technique to use in the project. Often, project managers and functional managers make use of combination of estimating techniques to arrive at the most accurate values required to begin the project that is, time, money and other valuable resources.
Ans. 2) It is true that there are so many estimation methods or techniques in project management and each of these estimation techniques are different to each other. Therefore, the project manager or the functional manager should first develop the understanding of the project. Their understanding should exactly match with the understanding of the client with respect to the project. Therefore, it is very important to first understand what all is required in order to complete the project. The requirements may include time, money, resources, people, technology, etc. The project managers can make use of common tools like work breakdown structures, business requirements analysis, etc. to arrive at these details.
Now, the project manager may order these activities that he has figured in the previous step. The order of the activities will decide the sequencing of the actionable. Also, in this step, the project manager will also decide which people he will be needing in this project for successful completion. Here, the skill-set of the people - technical, non-technical; experience, past exposure, etc. will be considered to make them a part of the project.
At this stage, the project manager will be in a position to make the estimates. There are variety of estimation methods that he can use. These include:
In most of the scenarios, the project managers make use of the combination of the estimation methods rather than relying on any one estimation method. This enables them to arrive at the closest values i.e. time, money and other resources.
Ans.3) If I was the project manager of this project, I would have used combination of Analogy based estimation and Parametric estimation. As highlighted by Peter in the case, analogy estimation method uses a similar past project that he has completed with almost same complexities and estimate the cost or duration of the current project. This estimation technique is mainly used when you do not have much information on the current project and therefore, you compare it with one of your previous projects to arrive at the approximate values. But, analogy based estimation is not considered to be the most accurate method. Therefore, along with it I would have used parametric estimation as well. In parametric method, in order to calculate the cost and duration, project managers identify the unit cost or duration first and then multiply it with the number of units required. For example, if it take 2 hours to complete one unit of a certain activity and if 4 units are to be completed to finish the project. Then, as per parametric estimation technique, it would take approximately 8 hours to complete the whole project.
Therefore, with the use of analogy based estimation and parametric estimation, I would have arrived at the closest values that Barbara and Peter needed to complete the project.
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