Point Estimates and Project Management
By Rich Maltzman, PMP
Sometimes Project Managers just don’t get the point. And in this case, that’s a good thing.
Mind you, I’m not referring to “getting the point” in the sense of understanding, rather I’m referring to getting point estimates. Here’s the deal. You have a project in its planning phase. You are getting estimates from a supplier. You’re interested, of course, in how much the widgets will cost, and how long it will take to provide the widgets. The communication goes like this:
- The supplier (and keep in mind that this could be an internal supplier, like an software developer or manager!) knows you are approaching them for an estimate. They think of their suppliers, their risks, their environment, their experiences, and develop (consciously or subconsciously) a range of numbers for both cost and time. That’s the key here – they are working from a range.
- The supplier may next add some cushion in both time and money and finally thinks of a point estimate for each. Keep in mind that to this point (sorry for the pun), nothing has yet been spoken!
- After all of this consideration, they declare, for example, “it will cost $13.50 per item and it will take us 5 weeks to deliver”.
- You – smart PM that you are – know that these points are selected from a range. So you do not say “thanks” and walk away at this juncture, nor do you try to negotiate these points. Instead, you ask the supplier if there is a range involved, and specifically what could modulate the price and/or the delivery date around.
If you are able to get this information, not only are you better-informed about the range of numbers you may be dealing with – and thus the risks, you also know the risk drivers involved. You may even be able to remove threats, or enhance opportunities, by helping the supplier if, for example one of their sources of variance comes from the project, which is entirely possible.
The takeaway lesson here: don’t settle for a point estimate. Push back – not from a stubborn/negotiation standpoint, but for more wisdom. More wisdom is a good thing for project managers. Get the point?
Rich Maltzman, PMP, has 30 years of industry experience, the last 20 of which have been in project management. Currently a Senior Manager for a large multinational corporation’s Global PMO, Rich has also been developing and delivering project management courseware and PMP prep packages for Boston University’s Corporate Education Center and mScholar. In addition, he and co-author Ranjit Biswas, PMP, are the lead authors, along with all of you out there, of the book, Fiddler on the Project, to be published in 2008, via its crowdsourced wiki site, http://fiddlerontheproject.bluwiki.org. You are invited to write it with them. You can also visit Rich’s blog at www.scopecrepe.blogspot.com.