Management in my organization insists on treating estimates as firm promises, despite the risk we face on our projects. There is much tension between the project managers and the executives because our projects do not come in as originally stated, and we are not in an industry where a full agile methodology is appropriate. How do I keep them from constantly viewing me as a failure when I can’t pull golden, foolproof estimates out of my hat?
A. Calculate three estimates based on past experience and PERT charts, and plan schedules that will self-adjust when the metrics of the project trigger them. Add contingency and management reserves to the plan.
B. Refuse to give estimates to management, citing past failure to have them prove accurate and expressing your concern that you don’t want to disappoint upper-level executives again.
C. Explain to management that you can only calculate the estimates, but it is up to your team to deliver the expected metrics to meet them. If they are unhappy with project metrics outcomes, perhaps they should look at adding to the team or replacing the current members.
D. At best, estimates are only an educated guess based on past experience. Rather than calculating new numbers each time, average the latest five similar project outcome numbers and submit those figures as the estimates for the new work.
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Answer: A. Calculate three estimates based on past experience and PERT charts, and plan schedules that will self-adjust when the metrics of the project trigger them. Add contingency and management reserves to the plan.
Failed estimates are one of the leading indicators of poorly planned and executed projects. But their failure does not always rest at the feet of the project manager. When there is a history of project managers who feel unfairly accused and upper management executives who feel inadequately prepared for derailed project metrics, the issue becomes larger than just calculating more precise numbers.
Once there is an atmosphere of mistrust, it takes working through a three-step process to come to a better working relationship and more reliable indicators of project outcomes.
1. Assign Blame. When project estimates prove inaccurate, there is always blame assigned. The project manager blames management, because they did not give adequate information about technical and functional requirements. Or, they changed the deliverables mid-stream. Or, they did not allow proper resources whether human (people), equipment (non-consumables), materials (consumables) or facilities (training rooms, hospital rooms, conference rooms, workspaces, manufacturing lines, warehouses, etc.).
In the same way, department managers or product owners may assign blame to the project manager and his/her team for presenting an initial estimate about when a product or service will launch, and the cost for creating it, that is seriously different from what the project actually delivers.
Teams blame managers, managers blame project managers, project managers blame customers and suppliers…it is an endless chain that serves no useful purpose for this project or the next.
2. Accept Blame. At some point in the process, people usually begin to realize they had a role in the lack of success and they turn on themselves. Managers think they have been foolish to rely on the word of the project manager, incompetent in hiring and staffing teams, and short-sighted in believing the product/service could be created at the time/cost presented. Project managers doubt their own skills in calculating project trajectories and their ability to effectively lead teams. But all of the self-doubt and self-blame does not do anything to help the future projects find a more productive path.
3. Solve Problems. Future success can only come when people work through the first two stages as quickly as possible, hopefully with only a quick thought or two in the assigning and accepting blame direction. Once these psychological milestones are past, you can begin to focus on the only useful step: solving the problem.
If the solutions were always mathematically based, such as tweaking a formula or sourcing better data, things would be simple. However, the real challenge is dealing with the human factors involved here. It takes more than one or two project estimate failures to create an atmosphere of mistrust and disappointment on both sides, so there is a long-term relationship rift here, which is the first thing that must be addressed.
When we have repeated conflicts with another, often each one a new version of an old tale, it is easy to begin to build internal, derogatory stories about that person. And now when we deal with that individual, rather than assessing their actual behavior in each interaction afresh, we tell ourselves that internal foundational story about them, their behavior and their character and then we add on new information from the current conflict. Unfortunately, we have a human tendency to pick out only the parts of the new conversation that reinforce the negative “story” we have built from our old “assign blame” step.
So the first adult action we must discipline ourselves to take is to look at today’s exchange with fresh eyes, open ears and unbiased interpretations. When you begin to drift back to your “story”, remind yourself that your goal is to find a solution, and wallowing in the transgressions of the past--whether someone else’s or yours--does not move you toward your goal.
Once we can have a somewhat objective view of today’s issue, think of it from the viewpoint of the manager. Why are inaccurate estimates such a hot point? Is he under pressure from his own manager? Are his own budgets for the department/company/portfolio being upset by these variations in your project? Are there deadlines for releases or product distribution that are unmovable? What does it mean for packaging, advertising, training, transportation or retail schedules if you are late?
How does this manager have to adjust not just his budget, but his requests that the organization provide him with liquid cash in an unexpectedly short time frame as a result of your project overages? What do your delays mean in terms of delaying personnel deployments to other project teams? Are there regulatory issues that were to be met by a hard deadline associated with your work? If you don’t know the answers, ask him.
Once you can begin to understand the important issues from your manager’s point of view, you are in better shape to decide how to adjust your estimating process. The understanding and checking out of the issues that are crucial to your manager--along with dropping those internal collective stories of insult and outrage you have assembled about this person--will move you to the place where you may have a more open, productive conversation about how to handle estimates.
One of the first discussions should involve you trying to change the language. In this environment, estimates have come to mean hard and fast promises to your manager. As project managers, we know this isn’t a good definition; but rather than trying to teach someone to correct their thinking whenever they hear the word, it’s easier to change the word.
Suggest to your manager that your new metrics are going to be called BEPs: Best Educated Projections. Use the full term rather than the acronym in conversations. Introduce the idea that you can take the information you have at the beginning of the process, and what you can do is use some project management techniques to try to project what may occur, but experience teaches you that it will never go exactly as you project. (pro-ject’)
You now know whether having this come in at a precise cost, on a definitive date or perhaps with a major flaw eliminated for compliance purposes is the driving force. Rather than just do an estimate as you have in the past, look at the last five to 10 projects you have completed. Were they off? How much? Why?
Use your quality training to see if the reasons had common causes that historically occur in your projects, were quantifiable and perhaps they have a pattern. This knowledge you can use when figuring your current project projections. If past projects had special causes (sometimes called “one-offs”) and they have not occurred again, you can ignore those special variations.
Of the last five to 10 projects, what percentage were they off from the original estimates? Was it a consistent amount? If there is a consistent amount attributable to a known cause, you can up future projections by that percentage amount or you can try to control the known cause of the overage, if possible and appropriate.
Another very workable approach to try to help your manager solve his problem of needing more reliable time or money estimates is to use PERT (Program Evaluation and Review Technique). As you recall from your PMPexam prep training, the standard bell curve predicts that 99.73% of the possibilities that your estimates will be accurate fall within two standard deviations to the right and two standard deviations to the left of the mean (the highest point of the curve with the most incidents). If you are working in a Six Sigma organization, you are aiming for only 3.4 items or fewer produced (designed or coded) out of 10,000 items produced (designed or coded) to have a defect. This is equivalent to + or – six standard deviations to the left or right of the mean, rather than only two.
So if you have an estimate for a task and want to figure the likelihood of it taking the amount of time you had planned, use the formula:
Since 99.73% of the likehood of your data being accurate falls within the four middle standard deviations from the mean in the standard bell curve, we are going to take the expected number (Ex) and multiply it times 4 (“expected” is the estimate we calculated by normal means). There is an outside chance (one standard deviation’s worth) that things will come in later or more costly than calculated. This is the “P” for Pessimistic. There is also a chance (one standard deviation’s worth) that things will come in earlier or less costly than originally planned. This is “O” for Optimistic.
For example, if through normal calculations we expect or think it is most likely that an activity will take five days, that if a known risk occurs it could take 10 days, but if all went perfectly it could be completed in only three days, here is the result:
It will take five-and-a-half days rather than only five days. Only half of a day may not seem like much, but if you do this for hundreds of activities over the course of a project, you can see how PERT would help you predict a more accurate schedule or cost.
A second but separate use of using three variables to hone in on a more accurate schedule (not just an individual activity estimate) would be to consider the major risks to the project. What would it mean if crucial supplies didn’t come in on time? Is there a union strike or a blizzard looming? What if a key piece of machinery that is know to be touchy broke? You could figure your usual estimate (now renamed a projection or BEP), an optomistic one and a pessimistic one.
Show all three to management and have a roadmap for the project with pre-determined checkpoints. If you get to checkpoint one and one or more of the pessimistic risks have occurred, agree that you immediately move over to the more expensive or more lengthy project path. There are pre-determined adjustments that can immediately be implemented at each check point. While this may seem like a lot of extra work for you as the project manager, what you are doing to instill understanding and a pre-commitment from management that project metrics may change and the schedule must be adjusted accordingly is worth it.
After a few projects done this way, you can perhaps ease off with actually preparing three separate tracks to document your projections and just have the metrics of when you can increase budget or time within a pre-arranged amount as long as you notify your manager.
If you are in a small organization you can try this with just your own team and your one manager. Don’t ask ahead of time if you can do this. Have the conversation to see his or her pain points and find out the most important things he or she needs to know and the time or cost constraints that are key. Then go in after you have prepared your three paths and the metrics that will trigger moving from one to the other. Suggest that since the past project estimates have caused some concern and disruption for the manager (not that it was an issue for you), trying this approach might be of benefit to him.
If you are part of a larger organization, you can try this alone or you can enlist other project managers to test this with you. Try it during the time period up to the first checkpoint on a roadmap, then meet with management to see what worked better, or what didn’t work perfectly and should be adjusted during the stage leading to the next checkpoint meeting. There is no need to wait until the end of the entire project to adjust things. And if your numbers show that there need to be additional adjustments to the project schedule, introduce those at the checkpoint meetings with management.
If you know that cost is an issue, have some ideas as to how costs that are escalating could be reduced. If you know a release date is set in concrete, suggest how additional resources or fewer features could help you meet that deadline.
A third idea to add is that usually project managers add a contingency reserve to the time and cost figures submitted to management. It can vary, but may typically be 10-15% of the entire project time or cost. This is to acknowledge that things don’t always go as planned no matter how skilled the estimates. In addition, suggest to management that they add 10-15% on their end as a management reserve, just in case. The contingency reserve is tapped at the discretion of the project manager, so it is shown in the original project estimate or BEP projections. However, the management reserve does not appear in the project figures.
Keep in mind that the statistics for a project are only indicators to allow adjustments by you as the project manager as the project progresses. Once management sees that you understand the importance of the project deliverables to the organization and are a colleague--rather than an adversary who is bringing in projects late and overbudget with no regard for the chaos it causes in the organization--you are well on your way to resolving the estimates nightmare.
So by dropping your self-written stories about the dasterdly actions, intent and meanness of others, accepting--but not dwelling--on your own role in project failure and moving on to take positive, visible steps to pinpoint and project cost and time more scientifically, you are well on your way to breaking the cycle of management disappointment in your estimates.
Please check the below link -
http://www.projectmanagement.com/contentPages/article.cfm?ID=293896&thisPageURL=/articles/293896/Topic-Teasers-Vol--55--Adaptive-Estimates&msg=Your%20comment%20has%20been%20posted%20below.&CFID=72450222&CFTOKEN=a24366c5056a1b00-5E7CC1C4-5056-A41C-E8B5D12DEABC3B1E
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