Effort - Duration - Money

Quick reference

• 00:05 Hello, I'm Ray Sheen.
• 00:06 I'd like to talk with you today about project estimates and
• 00:09 the relationship between the effort estimate, the duration estimate, and
• 00:13 the money estimate on your project tasks.
• 00:18 These estimates are related, and when you have one you can derive the other two
• 00:22 using some basic assumptions about your project.
• 00:25 Let's start with the effort estimate.
• 00:27 I find it's often easier to obtain effort estimates
• 00:30 from the task members in either duration or money.
• 00:33 They may not know their availability or the appropriate labor rates to use but
• 00:37 they can tell you that it will take them 20 hours of work to complete the task.
• 00:41 I normally estimate this effort either in hours or
• 00:44 days of effort, not in calendar days of time.
• 00:48 The danger with calendar days, is that the team member will make assumptions about
• 00:51 availability that aren't stated in the estimates.
• 00:55 For example, if someone tells you it'll be two weeks to do a task,
• 00:58 I don't know if it's 80 hours of work or only 10 hours of work but
• 01:02 they can't get to it until next Thursday.
• 01:05 So I always ask for the estimate in terms of effort, not calendar schedule.
• 01:10 Effort estimates are strongly related to the definition of done for the task.
• 01:15 The expected quality level impacts the required effort.
• 01:18 If the team member gives you an estimate for a task that is significantly different
• 01:22 than what you expect, check the quality level and the team member's assumption.
• 01:26 One of you may have the wrong definition of done for that task.
• 01:29 It's better to have that discussion now rather than in the middle of the task or
• 01:33 even worse at the end of the task.
• 01:36 Once I have the effort estimate, I'm ready to determine the duration estimate.
• 01:41 Effort and duration are linked through a series of questions.
• 01:43 If we have the effort estimate,
• 01:45 we can create the duration by answering the questions.
• 01:47 Also if we're on a schedule driven project,
• 01:50 we can start with the duration allowed, and
• 01:53 by asking the same questions can determine the effort that we can expend on a task.
• 01:58 I'll start with the effort estimate.
• 02:00 The effort estimate is in the hours or days of work.
• 02:02 Let's say that we have a task with 40 hours of work.
• 02:06 The first question to ask is whether this will be done by multiple people or
• 02:10 just one person.
• 02:11 If it is just one person,
• 02:12 then an example of 40 hours of work will take five days to complete.
• 02:17 But if they're five people on the task full time,
• 02:19 the task might be completed in one day.
• 02:22 The next question is for the individuals involved on the tasks, what percentage of
• 02:26 their time will they be able to spend productively working on this task?
• 02:30 If the five people could only spend one hour a day,
• 02:33 then this task is now stretched out to eight days.
• 02:37 The final question is whether any portion of this task
• 02:40 requires time without any effort.
• 02:42 The classic example is waiting for paint to dry.
• 02:45 It takes two days but no effort for the paint to dry.
• 02:49 After answering these questions, you can now translate an effort estimate on a task
• 02:53 into a duration estimate for that task.
• 02:56 When placing that estimate on the calendar,
• 02:58 I need to consider the normal work days and holidays of the individuals involved.
• 03:02 Based upon how this task relates to other tasks, determine the start date and
• 03:07 then come out the days to completion, allowing for weekends, holidays or
• 03:10 any other shutdown times.
• 03:12 Let's switch our focus now from time to money.
• 03:15 You can also start with the effort estimates for
• 03:17 a task and be convert it to money estimate.
• 03:20 Once again, we use the effort estimate in terms of how many hours or
• 03:24 days of work are required to complete the task or activity.
• 03:28 Our example is 40 hours of work.
• 03:30 Determine the appropriate labor rate to use for each individual working on
• 03:34 the task and multiply their hours by the labor rate estimate to determine the cost.
• 03:39 Now, don't go asking individuals how much money they're being paid per hour or
• 03:43 per day, use the average organizational rate for their skill set.
• 03:47 You can get that from your HR or finance person.
• 03:50 If our labor rate was $100 per hour,
• 03:53 then the estimate for the work on this task is $4,000.
• 03:56 Then add whatever appropriate overhead and related activities that
• 04:01 should be applied to your personnel costs, things like training and travel.
• 04:05 Let's say there's one overnight trip at a cost of $500,well now,
• 04:10 the estimate is $4,500.
• 04:13 Finally, there may be some additional cost estimates for
• 04:16 a task associated with things being purchased.
• 04:19 Ideally, there are bids or proposals for that.
• 04:22 If not, work with purchasing to create an estimate.
• 04:25 Add everything together to have a money estimate for your task.
• 04:29 So for our example, if we need to purchase $3,000 of test samples,
• 04:34 now the estimate has gone up to $7,500.
• 04:39 Effort, duration, and money, they are related.
• 04:42 Once we have one of those,
• 04:43 we can derive the other two with just a few assumptions about our resources.

Lesson notes are only available for subscribers.