(See the attached pics for the case – 2 images long) The Estimating Problem1 Barbara just received the good news: She was assigned as the project manager for a project

(See the attached pics for the case – 2 images long) The Estimating
Problem1 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 re-
quest 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 estimat-
ing team will then ask the functional managers for assistance with estimating.
Project managers like Barbara do not ofien participate in the bidding process.
Usually, their first knowledge about the project comes afier 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 significant span of time has elapsed between the date of submittal
of the proposal and the final contract award date. Barbara, however, is somewhat pes-
simistic. She behaves that accepting the estimates as they were submitted in the pro—
posal 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 twelve
weeks using one grade 7 employee full time. Barbara had performed this task on previ-
ous projects and it required one person full time for fourteen weeks. Barbara asked the estimating gmup 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 dis-
tribution 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 in-
cur 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 pro-
jects. Peter was a grade 9 employee and considered to be an expert in this work
package. As part of the discussions with Barbara, Peter made the following com-
ments: 1 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 impor-
tant, as it is in our project, analogy estimating would be better. Using anal,
ogy estimating and comparing the complexity of the work package on this
project to the similar works packages I have completed, I would say that
lfkl7 weeks is closer to reality, and let’s hope [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 a
grade 7 had been assigned, as the estimating group had said, how long
would it have taken the grade 7 to do the job? “Probably about 20 weeks or so" responded Peter.

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