Project Estimation
Project estimation is the process of determining all the requirements of a project. Variables such as costs, working efforts, deadlines, and the amount of work to be done are estimated.
Project estimation can be either Macro estimation or Micro estimation. “Macro estimations try to make a comparison, based on functional size, with other, similar projects, either by benchmarking or by using parameterized cost drivers while macro estimations are always complemented by micro estimations based on a work breakdown structure, identifying what needs to be done, even while acknowledging it is yet unknown”, (Th. Fehlmann, 2012)
Micro estimation
Micro estimation comprises of five steps and they are:-
Voice of the Customer for profiling Business Drivers
The customers are the main cost drivers in an organisation and thus they are taking into consideration when making estimates. Kano analysis can be used here. It classifies cost drivers into delighters, one-to-one requirements, and expectations. A profile of the project is developed thus deriving the requirements and the non functionalities that would be seen in the future.
Plan the Deliverables
A deliverable is identified through functional sizing and by use of the organisations need profile. The deliverables may be of impact to the cost drivers and sometimes may have no effect at all. Thus it is necessary to clearly analyse them. At this step, the drivers to be supported are split with those that need further reviewing.
Risk Assessment
“Risk is the potential of an adverse condition occurring on a project which will cause the project to not meet expectations” (Bahill & Smith, 2009). All the uncertainties and unknowns relating to the project are identified. This will enable those in charge to be able to make good resource allocations to avoid failure of the project.
Plan for Quality
At this stage, the project team will find out whether the project will meet the needs of the customers. If it cannot, they seek to look for ways on how to modify it to meet the needs. If successful, the process will assure the organisation customer satisfaction.
Add Test Plan; Complete the Estimate
The project plan is tested. The step also involves progress tracking, internal communication and project marketing. The project management and administration are also a part of this step. It sums up all the steps of project estimation and with this, a project would be ready to commence.
Project estimates should be realistic and stable to ensure that the project meets the expectations of all. All requirements need to be provided and this will ensure the project does no fail.
Risk Management
Risk can be defined as the combination of the probability of an event and its consequences (ISO/IEC Guide 73). Risk management is therefore important for the purposes of decision making. It is the continuous process of ascertaining risks attached to activities of an organisation and aims at coming up with deliverables of an activity. A good risk management standard should take into consideration all the aspects of the activity in question and consider the past, present and the future of the organisation. Below is a model of risk management comprising of four processes.
Risk assessment
Risk Assessment is defined by the ISO/IEC Guide 73 as the overall process of risk analysis and risk evaluation.
In risk analysis, the risks are first identified. The knowledge of the organization is vital for this process. All the activities relating to the organization are identified and the uncertainties of the activities are generated. After identifying the risks, a description should be done in order to display the risk in a structured form. According to ISO/IEC Guide 73, the use of a well designed structure is necessary to ensure comprehensive risk identification, description and assessment process. The other step is risk estimation. Estimation determines whether a risk is high, medium or a low risk. After estimating the risks, techniques for analysing the risks are sought. Finally a risk profile is generated and it gives a rating for each risk providing a tool for prioritizing risk.
Risk evaluation
At this step, the evaluated risk is compared with a risk criteria set by the organisation. Associated costs and benefits, legal requirements, socioeconomic and environmental factors, concerns of stakeholders are among some of the factors that may comprise the criteria. With risk evaluation an organization is able to know whether to take it or leave it.
Risk reporting and communication
The risk information is communicated to the various stakeholders. It can be internal where the board of directors, the departments in the organization and employees become informed. It can also be external where the information is communicated to the shareholders. After reporting, a decision is made.
Risk treatment
According to John Walz, Risk treatment is the process of selecting and implementing measures to modify the risk. It involves control, avoidance, transfer as well as financing of risk. Depending on the decision arrived at, taking up the risk or disposing it, the management should be fully committed to the decision and ensure its success.
References
Th. Fehlmann , (2012), Early Project Estimations, Euro Project Office AG
Terry Bahill, PE, Eric D. Smith, (2009), An Industry Standard Risk Analysis Technique
PD ISO/IEC Guide 73: 2002
John Walz, (2010) Software and Systems Engineering Risk Management
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