The Money Files

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A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from GirlsGuideToPM.com.

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7 Cost Management Terms You Should Know

Deep Dive: Project Schedule Management: Estimate Activity Durations

3 Ways to Talk About the Accuracy of Estimates [Video]

How To Facilitate an Estimating Session

Deep Dive: Project Schedule Management: Sequence Activities

7 Cost Management Terms You Should Know

Categories: cost management

There’s a lot of jargon in project cost management, and your cost management plan is full of terminology you might not have come across before.

There’s nothing difficult about the vocab, and it’s not trying to catch you out. However, if you are finding there are sections of your cost management plan that you don’t know how to complete, it could be because the jargon is new to you.

This infographic sets out 7 of the common cost management terms that you’ll come across when preparing a cost management plan, and explains them in simple language!

Posted on: March 20, 2019 09:00 AM | Permalink | Comments (11)

Deep Dive: Project Schedule Management: Estimate Activity Durations

Categories: estimating

Last time in the deep dive into the PMBOK Guide®-- Sixth Edition I looked at Project Schedule Management and the Sequence Activities process. You’d expect today’s instalment to be covering Estimate Activity Resources, which is what came next in the PMBOK Guide® -- Fifth Edition.

However, that process has now moved to the Resource Management Knowledge Area so we skip ahead to Estimate Activity Durations.

Estimate Activity Durations Process

This is (now) the fourth process in the Knowledge Area. We’re still in the Planning process group.

The point of this process is to work out how long each activity is going to take. You’ve already got the tasks in a logical sequence. Next it’s time to work out the overall duration of the project based on the duration of the individual tasks.

The main output is a set of estimates. These feed into the next process, where you create a project schedule.

In my experience, building the schedule and working out the activity estimates are two processes that overlap majorly. I’ll start creating the schedule in my project management software from the task list, and update the task information with durations as and when I know them. So the schedule is developed as each estimate (and other information like resource availability) is added.

Go into this process knowing how the estimates are going to be used, and you might save yourself some time when it comes to adding them into your schedule. This is all about being effective and managing your planning in an integrated way.

Right. Let’s look at the detail of this process starting with the Inputs.

Inputs

There are quite a few changes to the Inputs between the PMBOK Guide® -- Fifth Edition and Sixth Editions. Mainly, it’s items being removed. We’ve lost eight specific documents and replaced them with the generic Project Management Plan and Project documents.

This is a trend in the new edition. It’s a good trend too, as it allows us to be more flexible with the Inputs and use the paperwork that is most relevant to the project.

The important parts of the project management plan are the schedule management plan (as this includes some background info on expected level of accuracy and possibly other criteria useful for starting out estimating) and the scope baseline (as the WBS dictionary may include some criteria that would affect the estimate e.g. technical details or constraints).

Useful project documents to refer to during estimating include:

  • Anything that describes the tasks, so activity attributes and the activity list or WBS
  • The risk register, in case it has anything of value to consider when estimating
  • The lessons learned register, for the same reason
  • The assumptions log, as you may have to revise or update assumptions, or take them into account when estimating.
  • Information about the team, because the person doing the task affects how long the task will take – an experienced resource will be faster at completing work than someone new.

Tools & Techniques

Group decision making techniques and reserve analysis have dropped off the Tools and Techniques list.

Instead, we’ve got bottom up estimating (I’m not sure why that wasn’t on there before, as other types of estimating were – looks like an oversight to me), data analysis (broader than reserve analysis) and meetings (which you can argue includes making decisions as a group).

Most of the Tools and Techniques unsurprisingly relate to estimating approaches. As the main output is your estimates for task durations, you need to know how to estimate and which is the best estimating approach to use at any given time.

I’ve written quite a lot about estimating techniques in the past. Here are some articles to take these T&T further:

Analogous estimating

Parametric estimating

Bottom up estimating

And at some point I’ll get round to writing about three point estimating – that’s actually a technique I use and I consider it to be one of the better ways to estimate knowledge work.

Outputs

Activity duration estimates have been renamed ‘duration estimates’. These are statements about how long a task will take, either as a range, a defined number or similar.

There’s a new output for the basis of estimates, which is really important. If you haven’t been clear about how you created the estimate, you can’t explain the basis on which you reached the numbers. This is essential for helping other people understand the boundaries of the estimate, its reliability and whether or not it’s a final position. The basis of estimates should include an indication of the range used and confidence levels and can also refer to any risks that would influence the likely accuracy of the estimate.

Project document updates stays the same – you will have to update a range of paperwork, depending on what changes or needs review as a result of your estimates.

Next time I’ll be looking at Develop Schedule.

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Posted on: March 12, 2019 09:00 AM | Permalink | Comments (11)

3 Ways to Talk About the Accuracy of Estimates [Video]

Categories: estimating

Project estimating is something we have to do a lot. And being good at estimating generally means being accurate in the estimate. That doesn’t mean you have to get your budget figures defined to the nearest penny. But you do have to work out your numbers robustly and present them in a way that is clear to stakeholders. They need to understand how you are using the numbers and what they are looking at.

There are three ways to talk about the accuracy of estimates:

  1. Rough order of magnitude
  2. Budget estimate
  3. Definitive estimate

Find out more about how these different types of estimates are defined and calculated using ranges in this short video.

Read more articles about estimating.

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Posted on: March 04, 2019 09:00 AM | Permalink | Comments (7)

How To Facilitate an Estimating Session

Categories: estimating

estimating meeting

So you need to estimate some work for your project? Great. Project managers need estimates to help with planning, scheduling and budgeting. Estimates are useful things. But how do you get there?

Estimates come from talking to people. Even if you use scenario-based software or modelling tools, you have to talk to people to get the parameters set up correctly. The easiest way to do this is to run an estimating session.

Here’s how to facilitate the meeting so you get the outcome you need.

1. Get the right people in the room

First, get the right people in the room.

I’d recommend having separate meetings with separate groups of colleagues. There’s nothing more boring than having to sit in a meeting where people are estimating tasks that have nothing to do with your work, waiting around for your chance to talk about how long your work is going to take. If you don’t need everyone there together, split them up.

You need to have people who have the knowledge to contribute to the estimating process. These will be people who:

  • Have done the exact same tasks before
  • Have done very similar tasks before
  • Know a lot about the subject matter
  • Manage people who do the tasks
  • Have been involved in projects where these exact same tasks or similar tasks were done.

Your meeting attendees don’t have to hit every item on that list, but they should be knowledgeable and helpful to the ultimate goal of the meeting, which is to come up with estimates for your project plan. And that brings us on to…

2. Have clear outcomes

You can have a loose agenda, but you need to have clear outcomes. What are you estimating: the whole workstream or a particular phase? A set of tasks for the coming month?

Are you estimating time or money or both? If it’s time, do you want to get duration or effort out of the meeting (or both)?

If you are clear about what you need to achieve before the meeting closes, you are more likely to get there.

Keep bringing people back to the ultimate goals of the meeting and reminding people what you need from them. You can keep the meeting on track far better with clear goals – and generally, people want to be out of a meeting room as soon as possible!

3. Agree the techniques or approach

What tools, methods, approach and techniques are you going to use? People often get hung up at this stage because the language is off-putting. Is chatting with your expert peers really a technique? The PMBOK® Guide – Sixth Edition would describe this as Expert Judgement.

All this step means is work out how you are going to do the estimating. Make sure everyone understands how it is going to happen. For example, if you are using Monte Carlo simulation, then you’ve got software and a process for doing it. If you are making up the estimates based on a set of sticky notes on the wall and a long debate ending with a guesstimate, that’s fine too. Just get everyone on the same page.

Have an open conversation about how vague you are prepared for the estimates to be, and at what point they would be firmed up. How are you going to track confidence levels? (Are you going to note down confidence levels at all?) Sorting out things like this at the beginning of the meeting will ensure everyone understands the context for the estimate and can explain it to others when they leave the room.

If part of your approach requires looking at past project data (a very handy and robust way to estimate similar tasks) then I’d suggest you have that ready and accessible. Run a few reports or download some planned/actual data before the meeting so you don’t have to waste time in the session itself trying to find the figures you need.

4. Do the estimating

Now you come to the part where you have to do the estimating. You’ve got the right people. They know why they are there and what you need to get out of the session.

Now talk to them. Use the tools you’ve decided on. Run simulations, stick sticky notes on the wall. Pull up holiday calendars and plan around vacation time.

This part is the bulk of your meeting. Go through each item and estimate it. Make sure everyone has a chance to contribute. If you notice disagreements in the estimating process, try a technique like three-point estimating to bring most and least likely scenarios together in a way your experts can agree on.

5. Document and use the estimates

Document how you got to the estimate. You might think you’ll remember, but in three years, when someone asks you to run an estimating session for their project, trust me, you won’t remember exactly how you arrived at the end result. Sometimes I don’t even remember how an estimate was calculated and we only worked it out a few months ago.

Write down your assumptions and the constraints you took into account when coming up with the final figures. Note the confidence levels and anything else you considered when you were discussing the estimate.

Finally, all you have to do is use the estimates. Incorporate the outcomes into your project schedule or budget. Look at what impact that has. Update resource calendars and any other documentation that might change as a result of the new numbers.

Then get on and deliver those tasks!

Posted on: March 02, 2019 01:44 PM | Permalink | Comments (6)

Deep Dive: Project Schedule Management: Sequence Activities

Categories: scheduling

Today’s deep dive into the PMBOK Guide®-- Sixth Edition is into the third part of Project Schedule Management: the Sequence Activities process. I’m going to call out the differences between this process and what we used to have in the PMBOK Guide® -- Fifth Edition.

We’ve already planned for the work (see part 1 of this Deep Dive) and defined the activities (see part 2).

Sequence Activities Process

This is the third process in the Knowledge Area. We’re still in the Planning process group.

This process is about putting the activities you’ve already defined into a logical sequence. The main output is your network diagram, which shows how tasks link. However, I don’t think I’ve ever created a network diagram for a project. I’ve certainly sequenced activities, but I’ve never done it in such a formal way. A few sticky notes on some flip chart paper or just common sense as I’m putting the Gantt chart together tend to be the way I go about it. I’m sure there are projects that would benefit from a detailed network diagram, and I don’t doubt that it is a useful tool.

I’m from the school of thought that says don’t do things for the sake of them, just because the book says so, as long as you get the right result. I expect earlier in my career I spent more time checking the order of activities before defining my schedule, but now it all seems to happen as part of an integrated afternoon of planning.

Back to the detail of this process…

Inputs

There are quite a few changes to the Inputs between the PMBOK Guide® -- Fifth Edition and Sixth Editions. Having said that, in essence the main change is that the detailed list of documents has been removed, and replaced with the generic Project Management Plan and Project Documents. These are nice catch all inputs that also allow a more broad interpretation of what needs to be considered for activity sequencing.

Tools & Techniques

The only change to the Tools and Techniques is the addition of your project management information system. In other words, PMI acknowledges that you probably won’t create a network diagram using paper and pens.

Your PMIS is most likely an integrated project scheduling tool. If it does Gantt charts, it probably does network diagrams too, so you can print one out to prove you have it if ever you need it. I have looked at network diagrams in Microsoft Project before, so despite not actively putting them together as a distinct step before scheduling, I have found them useful for a visual representation of the project overall, especially when some activities look out of sequence or I can’t work out how the dependencies should look.

Software is helpful for:

  • Planning, organising and switching round activities so they appear in the right sequence
  • Managing dependencies, leads, lags and logical connections (plus making these connections visual on the Gantt chart and in the network diagram)
  • Helping you make the best choice for the dependencies used – I find that as there are options, I’m more likely to use the options, instead of always plumping for the Start to Finish type
  • Saving time. No one’s got time to produce a network diagram or project schedule from scratch, have they?

Outputs

There are no new outputs. Nice and easy. It’s all as it was before.

You’d expect this process to be followed by Estimate Activity Resources, but that’s actually been moved to the Resource Management Knowledge Area.

That means next time I’ll be looking at Estimate Activity Durations.

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Posted on: March 02, 2019 01:43 PM | Permalink | Comments (6)
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