We've all heard stories about estimation padding. The developer provided a 30 day estimation. His team lead doubted his wisdom and added another 10 days to it. The manager didn’t' have a lot of trust in his team’s abilities and added another 10 days. The senior executive felt more comfortable with the addition of another 10 days. The original 30 days doubled to 60 days by the time it reached the project sponsor/stakeholder. Their intentions were good; but the approach was based on rules of thumb (and maybe lack of documentation of the estimation details). The root cause behind all this is uncertainty and lack of confidence. If we can quantify the confidence or lack of confidence as a percentage, a more rational approach can be developed to add buffers to estimates.
If the project is in the initiation phase and the estimations are still based on high-level business requirements, a rule to add a certain percentage may be a good practice. Once the detailed requirements are being defined, the estimates need to be broken down to the task level. At this time, if out of 100 tasks, there's no ambiguity or uncertainty on implementation of 80 tasks, it's unnecessary to add a buffer to these 80 tasks. However, the remaining 20 tasks may need the addition of buffers in the estimation to account for the lack of confidence and ambiguities.
A rational approach would be to determine the specific time of buffer time needed for each of the 20 tasks. This sounds overwhelming but it's not. I determine a confidence percentage for each task. If I'm 50 percent confident of the estimation for Task A, and I have an estimate of 10 days, I would need a five-day buffer to mitigate the risks.
It can be easily integrated into the project plan, in Microsoft Project. Add a new column of type “Number” in the Gantt chart and name it as Confidence %. Add two more columns, of type “Duration,” for the original estimates and the calculated estimate (Estimation with Confidence). This is required since Microsoft Project doesn't allow the Duration column to be based on a formula. The formula can be added as in Figure 1. The calculation is simple: Add the percentage increase to the original estimate.
Figure 1. The addition of a calculated estimate in Microsoft Project.
The data from “Estimate (from Confidence)” will need to be copied to the “Duration” column.
This simple technique, while providing a rational way to add buffers, also helps in documenting the tasks in the project plan where there are some issues or risks. All the tasks that have confidence less than 100 percent must have associated issues or risks. These issues or risks must also be logged in issues or risks logs. As these issues or risks are resolved, the confidence for these tasks will increase. This should be reflected in a more accurate prediction of the project timelines and cost and better returns to the project sponsors and stakeholders.
An enhancement of this template could be to add another column listing the issue or risk log identifier. This could help with audit and reconciliation of risks and issues with the project plan. A task with Confidence percent less than 100 and a missing risk log identifier should raise a red flag.
One of my project management gurus once told me that project management isn't easy -- it’s supposed to be lot of work. It still remains lot of work. But, this technique has made it a little bit easier for me. While I continue working on adding the enhancements to my template, the approach has definitely helped me rationalize the estimate, risk mitigation and planning process as a whole.
Sumit Agarwal, PMP, currently works for Perot Systems, just outside of Philadelphia. He can be reached at sumitag (at) hotmail.com.