Calculating Level of Effort: How Do We Approach It?

Jiju ‘Jay’ Nair is a Senior Manager with Fannie Mae driving Cloud Transformation and adoption. He is an avid advocate for using innovative project and process management principles for building reliable and sustainable products.

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Topics: Cost Management, Earned Value Management, Estimating, Scope Management

LOE! This cry of despair usually rings out in the corridors of many organizations before a project is initiated. LOE, in project management terms, means the Level of Effort to perform the identified tasks in a project. Most project participants involved in the execution of projects know this term well--and many sometimes dread when it’s mentioned. For most project managers, it is the sugar that goes into their coffee that will make their lives easier in a project. If done right, their cost projections for the project will be the envy of other project managers. Also, the LOE provides the essential guide to chart out the direction of a project from ground zero.

So why is LOE as important for a project as other aspects like stakeholder satisfaction, cost overshoot and schedule variance? Level of Effort provides the basic framework for a project once a high-level scope has been defined. In most organizations, the amount of funding that the project might receive when it starts out will entirely depend on the initial LOE approved by the project committee, change control board or the project sponsor. Also, the resources acquired or allocated for a project will be based out of the LOE that was initially defined. The project manager will get other opportunities during the course of a project to refine the LOE for the entire project based on issues, risks and project …

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