Trust and Estimates

Did you hear this? A carelessly planned project will take three times longer to complete than expected? Well, a carefully planned project will take you on the twice as long. You think it’s a joke? It is not. It’s not in the project management book of knowledge. But nevertheless, it’s a law. It’s one of the immutable laws of project management. Today, we’ll do the math together. And you will see how through to life This law is. And I have some good news for you, too. You can do much better, obviously, with project management to the zero. Stay with me. And I’ll tell you what, we all have been missing doing project management the way we know it. This is part of project managers, not pnps course, to stay in the know, subscribe to collective. Thank you, me. And by the way, Hello, and welcome to all project managers, not bmps. My name is Sergei broken, I’m a certified recovering project manager and this is my advanced project management course. Welcome to Lesson number six. Last time, we talked about planning to start project off on the right foot, you need to have the project purpose and project requirements crystal clear, then and only then you may have a carefully planned project, which as you know now will take you twice as long as expected. That is happening mostly because your planning is based on the estimates that are very far from reality. To do better than that, get the true correct estimates and perhaps improve them and improve the project performance, you need to understand how the estimates are created and how the environment the team environment affects them. This is what we are going to do today together. This is where the value of Project Manager is coming from. As project manager, you are not making profit nor bring revenue, your role is to make sure that your project does not create unnecessary costs. You may say but that’s simply lean, okay, call it leave quality when Six Sigma if it makes you feel any better. But all those are toolboxes and buzzwords as best with a new project management to the zero approach. And I would say mentality, this will be a natural outcome of the project management process because it includes optimization as a project face. The key problem with Lean Six Sigma, agile weightwatchers, and all other cult like fad diets is that the result at best is like reinventing a three legged chair. It’s seemingly cheaper but definitely not very comfortable. And there are some other ramifications. For example, at CME A few years ago, Six Sigma almost killed innovation, look it up on the web. More recently, lean killed much more than innovation when was applied by Boeing. I would take my own word for it, of course. So I was pleasantly surprised myself when I learned that Tom Peters, well known to most of you supported me with a very eloquent tweet. And that is what what happens when you confuse cutting costs with cutting corners. And that’s why great managers like you need to get to the bottom of the problem. as men, ours more often than not have become the biggest expense of the project. Correct estimates are your greatest cost saving opportunity. Let me show you why project estimates are inherently wrong. There are many ways to gather estimates, I guess, you know, the mall from the pm Bach, whatever is your weapon of choice, delfy, analogous parametric and so on and so on. The quality of estimates is determined primarily by human factor. Here is how it works. What will be your estimate? If I ask you how long is your daily commute? On average? Let’s say your workplace is about 20 highway miles away. I’ll give you a moment to come up with an answer and probably your thinking will be from 20 minutes at night to one two hours during the rush hour. A fair estimate will probably be one hour a day both ways assuming average road conditions. But if the question comes from your boss who calls you on the phone and trying to suggest that your physical presence in the office will be desirable, your probable answer will probably be a give me an hour, because you will provide some buffer to accommodate the possible delay on the road. But what if you need to go to the airport and to catch your flight, your estimate will become more conservative because stuff. And you definitely want to avoid unnecessary risk at work as everywhere else. People tend to add buffer to the time and effort estimates to protect themselves, because that’s how all this fishes are wired. Because self preservation is the first law of nature. So this is quite normal, especially when people do not feel safe. When the trust is low. In the team, we will return the gain and the gain and the gain to the notion of trust. But for now, let’s look at another reason why estimates are inflated. Look at your own experience. And you may recall that as soon as you start doing something faster, let’s say 10% faster than before this new productivity level becomes your baseline next day. That is why we have absolutely no reason not to show our true potential to anybody, unless there is a very high motivational factor. But does your team have one. This is the second reason why project estimates are wrong. Also a very soft reason as you can see, even sales people who are working on commission are reluctant to show you away your growth more than 510 percent, because one year later, they will be expected to deliver 21% more than last year. In most cases, this is not a sustainable growth rate. We’re all down to push for higher inputs while limiting our outputs, thus rendering any system inefficient by default. And this is because of our biological wiring with self preservation hard coded and fine tuned by natural selection. The natural law, by the way, explains why socialism of any shade is not sustainable in any political, social or business environment, don’t you think? So? Think about it. And we may get back to it next week. As a great manager, you will be able to change that wiring, at least for your team. And I’ll tell you how. This is what project management to the zero is about. Let’s now complete our analysis of project estimates and do the formal math to see if it supports the immutable law number eight, carelessly planned project will take three times longer to complete than expected, and a carefully planned project will take you only twice as long. How far is that from reality? Actually, it is very close. Let’s look at the commuting example that we used in the beginning. And the initial and actually most honest estimate of your daily commute is the medium of the distribution curve of the time of arrival at the office. That means that 50% of time you will arrive earlier than planned and 50% later than planned. However, if you first see some problems like with your boss, who is not happy to wait for you, you will add some buffer. And likewise if you do not want to miss your flight, you will add even more buffer adding time you are trying to take the probability of your success to 100%. Often people when coming up with an estimate do not consciously realize the distribution curve is not symmetrical. And thus calculating the perceived average as the middle of the range is already flawed and is already an exaggerated estimate. But the main reason of inflated estimates is the absence of trust. In the absence of trust, team members are afraid to miss their deadlines, then to increase their perceived probability of success by pushing the estimate to the right. But taking it to a relatively safe level of let’s say 75%, not 100%. Anyway, we’ll at least double the real time estimates. which appears to be the best we can do in case we have a carefully planned project. Now add to this, the caves cost by the wrong estimates and your project will take three times longer. To complete exactly in line with the immutable law. If you follow me closely, by the way, you would interrupt me here and highlight a logical error. If the project estimate are too high, then the project actuals should be less than planned, at least sometimes. Thus, they may actually improve margins, right? logically correct. But in reality, it is the opposite. How come? This is beyond project management, per se? So let’s talk about it in the questions and answer session right after this class. Let’s summarize what we have discovered about the nature of project estimates. today. If you make sure that the project or product or service you deliver has a very high probability of success, then your cost will be high in the profit margin will be small, or even negative. counterintuitive, I guess. But this is very true. A great corollary to that, if you wait for your product to be 100% guaranteed to succeed, your competition will have delivered by that time. This worldview will help you a lot doing any kind of business. Whatever you do in life, the reward you get is proportional to the level of risk you take. bank robbers probably have the highest hourly rate, but they take on a lot of risk. And let me tell you, those guys usually have a very cohesive team. Once in my previous life, I wouldn’t, I wouldn’t go down. But I think I digress. You know now the root cause of poor planning, the next step will be to learn is simple, soft to the zero project management approach that will help you get the estimates very real close to reality, and actually much better than ever before. We will be doing just that during our next meeting when we start the optimization phase in a week from now, next time. See you in a week. This is part of project managers, not pnps course, to stay in the know subscribe to collective Thank you, me. See you in a week. happens sometimes. Question that popped up during the class today, why actuals are never better than even inflated estimates. You must have heard the answer before work expands so as to fill the time available for its completion. This is known as Parkinson’s Law, and is often referred to as a joke. But it is not a joke. Again, in simple words, if you need 10 hours to complete a task, you will probably use the 10 hours regardless. And even if the job goes faster than expected. In your mind, you will defend the inflated initial estimate by a the need to have a bar for and B if it goes first and you will take it easy, improve your work life balance and make sure that everybody sees that your estimates are always correct. Knowing that strong project managers start pushing the team and cutting the estimates sometimes in half. And the team of course starts pulling in the opposite direction. And when the two sides I mean project manager and the team members are not aligned, the result is going to be ugly, guaranteed. That takes us again back to the soft root cause it’s the absence of trust. I have a graph that I created working on a in a private high tech company a long time ago and it’s a very telling graph. Albeit it’s a small project. And that is yet another prove that lack of structure is not an additional saving but actually an extra cost. The company never had any project management in place to doesn’t have it by the way, but they realize that they need to do it right. So the plan the blue line had 2000 man hours over 10 weeks so called front heavy plan with the shipping date on weekend. In reality, nothing was done for the first several weeks as people were crazy busy fighting fires elsewhere, then the effort started growing exponentially. And eventually everybody in the company who could move was on the project helping to push the bloody thing out as soon as possible. But we fail to ship without penalties on the weekends. And finally shipped two and a half weeks later, wonder why there is a second wave, there is a spike there on week 17. We had to send people to the customer site, because the bloody thing wouldn’t work there. I doubt there was any margin left after that. What’s good about this project about this example is that it’s a very good business case demonstrating a typical PL one dot zero approach and providing the correct proving the correctness of the immutable law number eight, the project was planned as a 2000 men our effort as care for the plant, probably two times more than already necessary, but because it was not carefully planned, it took us almost 3000 man hours, and that is the end of the negative half of the project management to the zero background story. From now on adopting project management to the zero methodology and tools. We will only improve and will feel good about it. See you in a week.