SAB#59_Types_Estimations

Annotations:

• the role of project manager in estimating is to: - provide the team with enough information to properly estimate each activity. - let those doing the estimating know how refined their estimates must be. - complete a sanity check of the estimates. - prevent padding - formulate a reserve - make sure assumptions made during estimating are recorded for later review.

1. ONE-POINT ESTIMATING
   1. The estimator submits one estimate per activity. For example, the person doing the estimating says that the activity will take five weeks. The time estimate may be based on expert judgment or historical information, or it could be just a guess.

      Annotations:

      • negative effects: - it can force people into padding their estimates. - it hides important information about risk and uncertainties from the project manager that the project manager needs to better plan nd control the project. - it can result in a schedule that no one belives in, thus decreasing buy-in to the project management process. - when a person estimates that an activity will take 20 days and it is completed in 15 days, it can make the person who provided the estimate look unreliable.
2. ANALOGOUS ESTIMATING (TOP-DOWN)
   1. Applicable to both time and cost estimating, analogous estimating uses expert judgment and historical information to predict the future.
3. PARAMETRIC ESTIMATING
   1. Looks at the relationships between variables on an activity to calculate time or cost estimates. The data an come from historical records from previous projects , industry requeriments , standard metrics , or others sources
      1. REGRESSION ANALYSIS.
         1. The diagram tracks two variables to see if they re related and creates a mathematical formula to use in the future parametric estimating.
      2. LEARNING CURVE
         1. Example: the 100th room painted will take less time than first room because of improved effiiency,
4. HEURISTICS
   1. Means a generally accepted rule, or best practice. An example of a heuritic is the 80/20 rule. This rule, applied to quality problems are caused by 20 percent of potential source problems.
5. THREE-POINT ESTIMATING
   1. Analyzing what could go right (opportunitues) and what could go wrong (threats) can help estimators determine an expected range for each activity, nd if state this range using three time (or cost) estimates, the project manager an better understand the potential variation of the of the activity estimates and the overall project estimate. With the three-point technique, estimators give an optimistic (O), pessimistic (P), and most likely (M) estimate for each activity. Three-point estimating allows more onsideration of the uncertainty and the risk associated with the activities-
6. TRIANGULAR DISTRIBUTION (SIMPLE AVERAGE)
   1. A simple average of the three-points estimates can be done using the formula (P + O + M)/3. The use of simple averaging gives equal weight to each of the three-point estimates when calculating the expected activity duration or cost.
7. BETA DISTRIBUTION (WEIGHTED AVERAGE)
   1. GIVES STRONGER CONSIDERATION TO THE MOST LIKELY ESTIMATE. Derived from the Program Evaluation and Review Technique (PERT), this technique uses a formula to create a weighted average for the work to be done. The formula for beta distribution is (P + 4M + O)/6. Since the most likely estimate is multiplied by 4, it weights the average toward the most likely estimate.
8. FORMULAS
   1. EXPECTED ACTIVITY DURATION (TRIANGULAR DISTRIBUTION) "P + M + O/3"
   2. (BETA DISTRIBUTION) "P + 4M + O/6"
   3. (BETA ACTIVITY STANDAR DEVIATION) P-O/6
9. GROUP DECISION MAKING
   1. Involving team members in estimating can be beneficial on many levels.
10. RESERVE ANALYSIS
    1. Project manager have a professional responsibility to establish a reserve to accommoate the risk that ramain in the project after the risk management planning processes have been completed.