Planning
Three Point Estimates
By: Ray Myers, Jr., PMP The accuracy of an estimate can be improved by considering uncertainty and risk. PERT uses 3 estimates to define a range for an activity’s cost. This formula can be used for cost estimating and for scheduling. Most Likely – based on a realistic assessment Optimistic – estimated cost based on the best... »
4 Cost Estimating Techniques
By: Ray Myers, Jr., PMP There are 4 cost estimating techniques discussed in the PMBOK: Expert Judgment Influenced by variables such as labor rates, material costs, inflation, risk factors, etc. Guided by historical information and insights from prior similar projects May be used to determine whether to combine other estimating methods or reconcile differences between them Analogous or Top-Down Uses the... »
Cost Estimate Accuracy
By: Ray Myers, Jr., PMP The accuracy of project cost estimates varies depending on position in the project life cycle. Rough Order of Magnitude (ROM) Very early in the project ROM estimates are used for selection decisions Accuracy is usually plus/minus 50%, but could range from -25% to +75% Budgetary Early in the project Budgetary estimates are used for initial budget planning Accuracy... »
10 Questions for Every Project
By: Ray Myers, Jr., PMP The Project Charter is approved, the project planning is complete, and it’s time to begin the project. Before you start however, be sure that you can answer the following 10 important questions: Are the deliverables clearly defined? What activities and deliverables are not included in the project? Are all assumptions documented? Do you... »
Develop a Project Scope Statement
By: Ray Myers, Jr., PMP The 4th edition of the PMBOK eliminated the step to Develop Preliminary Project Scope Statement from the project Initiation phase. Previous editions of the PMBOK recommended that the preliminary scope statement be developed during Initiation, but since the project charter contains many of the preliminary goals for the project, the... »
Return on Investment
By: Ray Myers, Jr., PMP Return on Investment (ROI) is a measure of the profitability of a project or business investment. Net Benefit Compares benefit to cost of initiative = Benefit – Cost Benefit Cost Ratio Ratio for benefit returned for each dollar invested = Benefits / Costs Return on Investment % Percent in net benefits for every dollar invested = (Net Benefit /... »
Net Present Value
By: Ray Myers, Jr., PMP Net Present Value (NPV) is a measure of the net benefit of a project in terms of today’s dollars. NPV is a financial analysis technique that considers: Timing of cash flows Time value of money Projects with positive NPV add value to a firm, while projects with negative NPV diminish value and should... »
It Always Takes Longer Than You Expect
By Ray Myers, Jr., PMP Douglas Hofstadter’s law of programming simply states that, “It always takes longer than you think, even when you take into account Hofstadter’s law.” While Hofstadter was writing about programming when he introduced his adage, it may also apply to the estimates we do as project managers. If your experience has been... »
Ready, Set, Start Your Project
By Ray Myers, Jr., PMP Congratulations! You have been assigned to manage your next project and you’re eager to get started with planning. There’s a lot to be done, build the WBS, schedule the work, assemble the implementation team, and meet with the client. But with so much to do, what should you do first? ... »
4 Things to Do When You Start a New Project
By Ray Myers, Jr., PMP What are the first four things you should do when you begin a new project? It’s a good question and every project manager should know the initial steps he or she will take when beginning a new assignment. Starting on the right foot may not prevent future problems, but it... »
