Estimating & Control Reliable Estimates for Realistic Projects

Frank Vogelezang Manager Pricing Office

2 Agenda Estimating IT projects

Estimating . . Off track?

On track with a track record

Keep track

Introduction Frank Vogelezang 3

Pricing Office

Functional Size - NESMA FPA - COSMIC

Estimating . . Off track? Why is IT so difficult to create reliable estimates

IT has a bad track-record in project estimating Estimating . . Off track?

5

For a critical analysis of the Chaos reports see: www.cs.vu.nl/~x/chaos

IT has a bad track-record in project estimating Estimating . . Off track?

Any idea where this bad track-record comes from?

No clear project objective

Start with an inadequate budget

Too little time and/or resources

No use of benchmarking

No idea what an estimate is

6

We can double the estimate . . . . but then it will

ultimately be four

times as expensive!

on estimating

A typical IT estimate Estimating . . Off track?

7 P

rob

abili

ty

Schedule / Cost

50/50 median result

First likely option

Estimating on track Start on track and stay on track by building a track record

On track or off track Keep track of your portfolio

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www.itdashboard.gov

-15% on $5.3 Billion

+31% on $461 Million

Benchmarking as reality check Does it fit my historical track record?

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Paul Masson’s Law

Parkinson’s Law

Brooks’ Law

Minimal time

Optimal effort

Time

Effo

rt /

Co

st

Realistic Productivity

A bad estimate is the start of a troubled project Recommended practices as an external track record

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Estimation

purpose

Engagement

Scope

Description

Estimating

methodology

(FP, expert,

etc.)

Estimate

Classification

(1,2,3,4,5)

Design Basis

(Components

lists, units, etc.)

Sizing Basis

Requirements

Functional

technical

Effort Basis

delivery

constraints,

service levels

Planning Basis

Working time

standby

Cost Basis

methods and

sources , units

Assumptions

internal,

external

Allowances

Not in the Basis

Exclusions

No costs

included for…

Exceptions

anomalies or

variances on

standard

Risks and

Opportunities

assumptions

Containments

cost elements

for mitigation

Contingencies

Uncertainty,

unforeseeable

elements

Management

Reserve

changes in

scope, effort

Reconciliation

Changes to

previous

estimation

Benchmarking

Comparisons to

similar

engagements

Estimate

Quality

Assurance

Reviews

Attachments

Level of detail

Stage, Deal

size/type, fixed

price/TM

Attachments Attachments Attachments

Keep track From a reliable estimate to a realistic project result

13 Keep track Actuals versus plan

Schedule Variance

Time Variance

Cost Variance Budget Variance

Actual cost Earned value

14 Keep track Forecast based on actuals

Schedule Slippage

Cost Overrun

Actual cost Earned value Total cost (forecast) Total value (planned)

15 Keep track The whole picture

Budget Variance

Schedule Slippage

Schedule Variance

Time Variance

Cost Variance

Cost Overrun

Actual cost Earned value Total cost (forecast) Total value (planned)

16 Keep track with Estimating & Control Reliable estimates and realistic projects

Estimate & Plan

Create a baseline estimate

Develop a Project Plan

Monitor and Control

Document actuals

Create forecast based on actuals

Re-estimate and establish new baseline

Measure and Analyse

Establish variances for the whole project

Determine experience data parameters

Incorporate this knowledge in future estimates and plans

Estimate &

Plan

Baseline(s) vs Final Actuals

Experience & Knowledge

Measure &

Analyse

Monitor &

Control

17

frank.vogelezang@ordina.nl

WatKostIT.blogspot.nl

ThePriceofIT.blogspot.com

@FrankVogelezang

FrankVogelezang

www.linkedin.com/in/frankvogelezang

Basis of Estimate for IT Services New standard practice by NESMA and AACEi

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Estimation

purpose

Engagement

Scope

Description

Estimating

methodology

(FP, expert,

etc.)

Estimate

Classification

(1,2,3,4,5)

Design Basis

(Components

lists, units, etc.)

Sizing Basis

Requirements

Functional

technical

Effort Basis

delivery

constraints,

service levels

Planning Basis

Working time

standby

Cost Basis

methods and

sources , units

Assumptions

internal,

external

Allowances

Not in the Basis

Exclusions

No costs

included for…

Exceptions

anomalies or

variances on

standard

Risks and

Opportunities

assumptions

Containments

cost elements

for mitigation

Contingencies

Uncertainty,

unforeseeable

elements

Management

Reserve

changes in

scope, effort

Reconciliation

Changes to

previous

estimation

Benchmarking

Comparisons to

similar

engagements

Level of detail

Stage, Deal

size/type, fixed

price/TM

Estimate

Quality

Assurance

Reviews

Attachments Attachments Attachments Attachments

Row 1 – General aspects Basis of Estimate for IT Services

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Estimation

purpose

Engagement

Scope

Description

Estimating

methodology

(FP, expert,

etc.)

Estimate

Classification

(1,2,3,4,5)

Level of detail

Stage, Deal

size/type, fixed

price/TM

Purpose

Engagement Scope Description Decomposes the solution into its constituent elements

Estimating methodology Is the estimate functional size based, expert based, analogy based, process metrics based, parametric based

Estimate Classification From detailed fixed-price estimates (1) to the first screening of ideas (5)

Level of detail The lower the classifiction, the more details are needed

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Row 2 – Basis Basis of Estimate for IT Services

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Design Basis

(Components

lists, units, etc.)

Sizing Basis

Requirements

Functional

technical

Effort Basis

delivery

constraints,

service levels

Planning Basis

Working time

standby

Cost Basis

methods and

sources , units

Design Basis Process or architectural documents that describe the project

Sizing Basis Units used to express the project in product quantities

Effort Basis Methods (and tools) used to convert size into effort

Planning Basis Activities, Milestones and Constraints

Cost Basis Methods and sources used for determining all unit, effort, subcontract,

material and expenditures cost

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Row 3 – Risks Basis of Estimate for IT Services

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Assumptions

internal,

external

Allowances

Not in the Basis

Exclusions

No costs

included for…

Exceptions

anomalies or

variances on

standard

Risks and

Opportunities

assumptions

Allowances

Assumptions

Exclusions What is nót part of the estimate

Exceptions Anomalies or variances to standard estimating practices

Risks and Opportunities High risk or opportunity related to cost, duration, quality and/or safety R

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ND

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PR

AC

TIC

E

Row 4 – Mitigation Basis of Estimate for IT Services

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Containments

cost elements

for mitigation

Contingencies

Uncertainty,

unforeseeable

elements

Management

Reserve

changes in

scope, effort

Reconciliation

Changes to

previous

estimation

Benchmarking

Comparisons to

similar

engagements

Containments Measures included to prevent and/or mitigate the identified risks

Contingencies

Management Reserve

Reconciliation major differences between the new

or re-baselined estimate and the last published estimate

Benchmarking comparisons of overall estimate metrics, ratios, and factors with similar

engagements, historical data, and industry data

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Row 5 – Quality Basis of Estimate for IT Services

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Estimate

Quality

Assurance

Reviews

Attachments Attachments Attachments Attachments

Documentation of the QA on the Estimate

Estimate Deliverables Checklist

Reference Documents sizing report, requirements, designs, texts, notes, specifications

Additional Attachments (optional) reconciliation report, benchmarking report, risk analysis report

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