Author: Anton Bobykin, www.eastbanctech.com In this presentation, we discuss and learn estimating for fixed price projects. Project managers, Tech/Team leads, and Developers will: - Uncover estimating pain points and look for solutions. - Understand what techniques are best for Estimating for fixed price RFP with no team assembled and no historic data

1. Estimating for Fixed Price Projects

2. Overview
• Problem statement
• Known estimation approaches
• WBS-based (bottom up) estimation
• Three-point estimation
• Assumptions
• Risk management and reserves
• Reserves versus Assumptions
• Reasons for poor estimates

3. Problem statement
• Project or even domain is
unknown
• Team is not yet defined
• Lack of experts
• Typically lack of time and efforts
for analysis and discovery
• But you need to prepare RFP
Cone of uncertainty

4. • Analogy-based estimation
• WBS-based (bottom-up)
estimation
• Parametric models
• Size-based estimation models
• Group estimation
• Mechanical combination
• Judgmental combination
• Typical projects
• Discuss it later…
• Typical Android screen = 40hrs
• Story points in Agile
• Planning poker
• AVG(Analogy-based, WBS)
• Expert judgment for above
models
Known estimation approaches – no silver bullet

5. • Deliverable-oriented
decomposition of the project into
smaller components
• WBS permits summing of
subordinate costs for tasks,
materials, etc…
• Design principles: 100% rule,
mutually exclusive components,
outcomes not actions, level of
detail
WBS-based (bottom up) estimation
Product, data, service

6. Three-point estimation
Normal distribution plot
2xSD = 95% (typical in software dev)
3xSD = 99.7%
• Optimistic, most-likely,
pessimistic
• Estimate(50%) = (P+4*ML+O)/6
• SD = (O – P) / 6
• Estimate(95%) = E + 2 * SD

7. Assumptions
• Reading between lines
• Requirements guessing
• Functional and non-functional (technology)
• Out of scope assumptions
• Team / resources assumptions
• Skill level
• Availability
• Realistic
• Review with customer -> change requests

8. Risk management and reserves
• Identification - Risk registry
• Assessment
• Estimates, Risks – input to Cost mgmt
• Contingency reserves
• Management reserves

9. Reserves versus Assumptions
• Two extremes for unknown: all assumed and all are risks
• All assumed – Low cost and lots of changes
• All are risk – High cost
• Balance:
• Everything critical for customer – assumptions
• Everything optional - risks

10. Reasons for Poor estimates
• Undefined objectives
• Incomplete plans
• Unrealistic resource assumptions
• Naïve estimates
• Customer/management arrogance
• Lack of training in developing estimates
• Adverse relationship between estimators and customers
• Absence of accountability
• Lack of candor (transparency)

11. THANK YOU
Anton Bobykin
Project Manager
abobykin@eastbanctech.com
202-295-3000
eastbanctech.com