The Money Files

So often when we think about benefits, we think about the ones that relate to money. ROI, NPV, IRR and so on are often what stakeholders care most about.

But not all stakeholders. Sometimes the impact on the business or the customer is more important, or at least equally important, as the financial return.

In this video I discuss 3 softer project benefits. Don’t get me wrong: you can talk about these in monetary terms if you want to, but sometimes looking at other measures is actually more powerful.

There is more information about using these benefits in project selection in this video.

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What are the steps for estimating?

Each business will have a slightly different approach to how to do project estimating, and your PMO will likely have a methodology that you are expected to use. For budget estimating, it maybe the corporate Finance department that sets out how estimates are supposed to be calculated.

However, back in the real world, I meet lots of project managers who don’t have the benefit of a fully-documented helpful process for how to do estimating, so in this article I’ll look at the 4 steps for working out your estimates to give you a headstart!

What is an estimate?

First, it’s worth us defining what an estimate is.

An estimate is a quantitative assessment of a likely outcome.

You will find far more detailed definitions of estimates elsewhere, I’m sure, but that does for me.

On projects you have to do quite a lot of estimating, for example:

• For task duration
• For task effort
• For expenditure
• For benefits.

Let’s look now at the 4 steps of project estimating. Again: if you have your own corporate methodology to follow, use that or you risk getting into trouble with the PMO! But in the absence of anything else, this 4-step approach is as good as any for getting the basics right.

Step 1: Plan to Estimate

The first thing to do is make a plan. As with so many project management techniques and processes, you need a clear idea of what you are supposed to be doing before you actually do it. This step is where you establish your estimating plan.

That sounds far grander than it really is. It isn’t a lot of work, and once you’ve estimated a couple of projects you’ll find you can do this step almost automatically, with very little effort.

Work out:

• What techniques you are going to use to do the estimating (it’s also good to know why you are using those techniques so you can justify that you chose the best approach for the job)
• Who is going to contribute to putting the estimates together.

You’ll also need any other documentation about estimating approaches or corporate or PMO standards that you have to adhere to. This all provides input into how you are going to create your estimates and helps you come up with a solid plan for how to approach the task of estimating.

Step 2: Create the Estimate

This is where you create your estimate. Basically, you use the techniques that you identified in your planning step to come up with your estimates. Work with your team to think about the resources, budget and time that you need. Use the tools you identified, and the guidance from your company to create the estimates.

I’d suggest you don’t do this by yourself, how tempting it might be. Hopefully the techniques you identified in Step 1 will recognise that it’s better to work collaboratively for estimating. Different opinions make a difference and you’ll get a better quality estimate – hopefully you chose to use techniques that take advantage of this!

Step 3: Manage Estimating

Here we manage the estimates. You’ve input your estimates into your budget or schedule and you are using them on the project.

However, you want to make sure that they are maintained and managed as the project progresses. This means you could be revising them appropriately as the team do the work, making sure they still accurately reflect what you think is needed on the project.

The most common way to do this is to compare your estimates to your actual figures as you go, and then tweak the upcoming budget figures, schedule or resource allocation appropriately to take account of what you are learning about progress on the project so far.

Step 4: Improve Estimating

This is where you apply continuous improvement principles to the way you work out your estimates. You could argue that this is an optional step – it doesn’t help you manage your current process – but I don’t think it’s too much to ask that you do this on all projects, all of the time.

You’ve learned from your experiences on this project, so take those lessons and look at how you can improve estimating on your future projects.

Calibrate your models, tweak your techniques and do any other changes necessary as a result of what you have learned on this project. This may mean you have to feed information and your experiences back to the PMO or Finance team so that they can take your feedback into account and make the required changes (or not). Still, even if you aren’t in control of the templates and models you use, it is good practice to try to help your company improve its processes where you can.

Those are the 4 high level steps for creating an estimate. See? It wasn’t so bad. Personally I think the planning stage is the hardest, because it involves thinking instead of just diving in. The rest of the process is all about using the tools you decided on and then working with them throughout the life cycle of the project.

In this video I share a few more ways to track project schedule performance. Sometimes it helps to look at the schedule in different ways, or to use different approaches to get updates from the team. Ultimately, the more tools you have available to you, the easier it is to flex your style to manage performance.

How do you track schedule performance? Let us know in the comments below.

There are a couple more ideas for tracking project schedule performance in this video.

I also mention this book, Healthcare Project Management, in the video.

In this instalment of What’s New In the PMBOK Guide®-- Sixth Edition, we’ve made it to the fifth process in Project Resource Management (see here for Plan Resource Management, Estimate Activity Resources, Acquire Resources and Develop Team). Today, it’s the turn of the penultimate process in this knowledge area: Manage Team.

This process name has changed from Manage Project Team.

Manage Team Process

This is the fifth process in the Knowledge Area. We’re still in the Executing process group.

This process is all about tracking performance of what people do, helping them out, giving feedback, switching in and out new people as required and generally looking after all the team-y things to keep the project moving in the right direction.

Inputs

Team performance assessments, work performance reports and OPAs are still in. Human resource management plan is replaced by project management plan.

Project staff assignments has gone, and so has the issue log. There are some new ones that replace these.

Project documents: Team assignments falls under this category. The team charter is also a document you might want to consider as an input. As we have seen before, other documents like the issue log and lessons learned register can give you useful information on the types of things to consider or that might go wrong, based on past experience.

Enterprise environmental factors: In particular, HR policies might be helpful here.

Tools and Techniques

This section feels like it has been streamlined. Perhaps that’s because this process only deals with the people involved in the project. Other processes in this Knowledge Area talk about the non-people resources too, but this one is just about the team.

Observation and conversation, interpersonal skills and conflict management have been replaced by the general technique of interpersonal and team skills. This is far broader and can include other skills like negotiating and influencing.

Project performance appraisals, which related to progress updates and status reporting, etc, has been replaced by project management information system. There is information in the PMIS that will help you schedule the work, reassign tasks to the right person, deal with late work and so on.

Outputs

There is not much change in the outputs.

In fact, the only thing that is different is that organisational process asset updates has been removed. Given that this appears almost everywhere, I think it’s strange that it has been taken out here. Why could you not have uncovered something important that would change a policy or process, during your work managing the team? Anyway, it is no longer in, so watch out for that.

As you can see, there hasn’t been much change to this particular process. There is still one more process to go in this Knowledge Area, so next time I will be looking at the final process, Control Resources.

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Budget “overs” are a way of filling the gaps in your budgeting process and acting as a safety net for when things go wrong, right?

Not exactly.

Management reserves and contingency reserves are two very specific types of “extra” money in your project budget. They both have distinct roles to play in helping the business achieve the deliverables in line with the forecasted expenditure.

In this infographic I summarise the differences between these two different types of funding. Personally, I think contingency reserves are the more useful as they are tied to a specific event so they help improve risk management as well. What do you think?

You can read more about some of the ideas on this infographic in this article.