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## PM D4

THE ESTIMATING PROBLEM

Barbara just received the good news: She was assigned as the project

manager for a project that her company won as part of competitive

bidding. Whenever a request for proposal (RFP) comes into Barbara’s

company, a committee composed mainly of senior managers reviews the

RFP. If the decision is made to bid on the job, the RFP is turned over to

the Proposal Department. Part of the Proposal Department is an estimating

group that is responsible for estimating all work. If the estimating group

has no previous history concerning some of the deliverables or work

packages and is unsure about the time and cost for the work, the

estimating team will then ask the functional managers for assistance with

estimating.

Project managers like Barbara do not often participate in the bidding

process. Usually, their first knowledge about the project comes after the

contract is awarded to their company and they are assigned as the project

manager. Some project managers are highly optimistic and trust the

estimates that were submitted in the bid implicitly unless, of course, a

989

significant span of time has elapsed between the date of submittal of the

proposal and the final contract award date. Barbara, however, is somewhat

pessimistic. She believes that accepting the estimates as they were

submitted in the proposal is like playing Russian roulette. As such,

Barbara prefers to review the estimates.

One of the most critical work packages in the project was estimated at

performed this task on previous projects and it required one person full

time for fourteen weeks. Barbara asked the estimating group how they

arrived at this estimate. The estimating group responded that they used the

three-point estimate where the optimistic time was four weeks, the most

likely time was thirteen weeks, and the pessimistic time was sixteen

weeks.

Barbara believed that the three-point estimate was way off of the mark.

The only way that this work package could ever be completed in four

weeks would be for a very small project nowhere near the complexity of

Barbara’s project. Therefore, the estimating group was not considering

any complexity factors when using the three-point estimate. Had the

estimating group used the triangular distribution where each of the three

estimates had an equal likelihood of occurrence, the final estimate would

have been thirteen weeks. This was closer to the fourteen weeks that

Barbara thought the work package would take. While a difference of 1

week seems small, it could have a serious impact on Barbara’s project and

incur penalties for late delivery.

Barbara was now still confused and decided to talk to Peter, the employee

that was assigned to do this task. Barbara had worked with Peter on

previous projects. Peter was a grade 9 employee and considered to be an

expert in this work package. As part of the discussions with Barbara, Peter

I have seen estimating data bases that include this type of work

package and they all estimate the work package at about 14 weeks. I

do not understand why our estimating group prefers to use the three

point estimate.

“Does the typical data base account for project complexity when

considering the estimates?” asked Barbara. Peter responded:

Some data bases have techniques for considering complexity, but

mostly they just assume an average complexity level. When

complexity is important, as it is in our project, analogy estimating

would be better. Using analogy estimating and comparing the

complexity of the work package on this project to the similar works

packages I have completed, I would say that 16–17 weeks is closer to

reality, and let’s hope I do not get removed from the project to put out

a fire somewhere else in the company. That would be terrible. It is

impossible for me to get it done in 12 weeks. And adding more people

to this work package will not shorten the schedule. It may even make

it worse.

Barbara then asked Peter one more question:

Peter, you are a grade 9 and considered as the subject matter expert. If

long would it have taken the grade 7 to do the job?

“Probably about 20 weeks or so,” responded Peter.

QUESTIONS

1. How many different estimating techniques were discussed in the case?

2. If each estimate is different, how does a project manager decide that

one estimate is better than another?

3. If you were the project manager, which estimate would you use?

Read the above paragraph and answer the below Questions in APA Format with  Minimum of 125 words for each question.