Estimating Effort: Part 3

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Preparing Three-Point Range Estimates

The mechanics of preparing three-point range estimates, particularly if you are working with team members who have never used the technique before, are important. And just a reminder: we are still dealing with effort estimates; duration estimates come later.

Working one-on-one. Let?s again start with a simple case where you need an effort estimate from an individual team member regarding how much of their effort is likely to be required to complete a specific activity. The first step is to make certain that both of you have a common understanding of words like ?estimate? and ?complete.? For example, it is always tempting to say something like ?how long do you think this will take?? This question is likely to produce a duration estimate rather than an effort estimate. Try to ask something like ?how many hours of your time do you think this activity will take??

Begin the discussion with a review of the work to be done to ensure that both you and your team member have a common understanding of the work. If there are unknowns, decide how to handle them?make assumptions, go get answers, whatever.

Once you have a reasonable level of agreement, ask the individual for their effort estimate of the most likely result. I tend to use words like ?if these assumptions turn out to be true, how much of your time do you think this work is likely to take?? After they?ve answered that question, I ask ?if every thing goes well, if you get very lucky with this activity, and still using the same assumptions, how much of your effort do you think this activity will take?? Then I use similar language to obtain a pessimistic effort estimate.

Remember to keep your assumptions constant. If you develop an optimistic estimate based on everything going well, and a pessimistic estimate based on nothing going well, the range of the estimates will be quite large. Very large ranges make most people uncomfortable because it appears that they don’t understand the work. In addition, it will be harder for you to assess the accuracy of the range estimate later because you’ll have to factor in all the different assumptions.

Understand that the first few conversations with any given individual are unlikely to go smoothly. They may generate additional questions or ask you to make additional assumptions at any point during the conversation. Fine. Let them. Help them climb the learning curve. My experience is that it takes most people 3-5 iterations to get comfortable with the process. After that, they?ll start giving you three-point estimates automatically.

Feel free to challenge their estimates, but do so constructively by asking clarifying questions. Do not cast aspersions on their estimates. If your estimate differs from theirs by a substantial amount, the most likely explanation is that your understanding of the work differs from theirs. Concentrate on identifying and resolving those differences.

It also seems to be important to start by asking for the most likely result, then the optimistic, and then the pessimistic. I don?t know why, but this sequence seems to work best.

Working with a group. Most of your estimates will not be developed one-on-one, but rather will be developed by small groups as part of a team planning process. The basic process remains the same for these small groups:

  • Review and agree on the work to be done.
  • Document the assumptions.
  • Develop three-point range estimates starting with the most likely result.

Even when some of the group members don?t have deep expertise in the project?s work, their presence can help to surface unstated assumptions and to build team-wide commitment to and understanding of the effort estimates.

Other approaches to three-point range estimates. Some project managers try to expedite the development of a three-point range estimate by asking for only two numbers?the most likely and some form of variance (e.g., ?10 hours, plus or minus 2?). While this statement equates to a three-point range estimate of 8, 10, and 12, in my experience, it lacks the richness of my process?it doesn?t seem to generate the same degree of thoughtfulness from the estimator.

Will this take too much time?

I am convinced that the thinking process and the conversations that support three-point range estimating contribute to the development of more accurate estimates. Short-circuiting the process may appear to save time, but it’s a false economy.

My experience is that developing three-point estimates almost always takes less time than single-point estimates because the conversational process eliminates the posturing and gamesmanship that often delays the development of estimates. I?ve have had teams in my project management training courses spend less than an hour to develop an estimate for a 4,000 hour project ? an estimate that later proved highly accurate. A recent client spent less than a day to discover that a mission-critical, multi-million dollar new product development project was going to be eight months late. An investment of something less than $10,000 is expected to return in excess of $10,000,000. Time spent estimating is not a cost, it is cheap insurance.

In the next article of this series, I?ll cover some of the more difficult challenges of estimating effort on projects: what to do when management thinks it should take fewer hours, using range estimates with project management software, how to deal with the natural (and normal) biases of the estimators, understanding the difference between accuracy and precision, and how to use some basic, simple statistical methods to create an estimate for the whole project.