I have recently been running a project management workshop at one of the European banks and an interesting dialogue took place between one of the senior managers and me. He basically asked me the following question:
I have a feeling that our project managers constantly pad their estimates in order to obtain more breathing room and to make their lives easier than they should be. How does one address this issue?
In response I walked over to the next available flipchart and drew this figure (see Figure 1):
Me: When you assign projects to your project managers what do you usually ask of them?
SM: Well, I usually ask them to tell me how long on average this project should take ...
Me: (pointing to Figure 1) So, basically when they answer your question, they provide you with a "fair" estimate for this project. Do you realize that according to the laws of statistics, you have only a fifty percent chance of hitting that deadline?
SM: Oh, I never thought about it that way ...
Me: And we haven't even considered the optimism bias theory, that in a nutshell , states that humans tend to constantly overestimate their abilities and underestimate the complexity of tasks at hand. So, in reality when they think that they provide you with a 50/50 estimate, they actually supply you with a deadline they have only a 20% probability to hit (see Figure 2)?
Me: So, as a project sponsor would you be comfortable with only a 20% probability of finishing on time?
SM: Absolutely not!
Me: So, what threshold would be satisfactory for you?
SM: I guess at least 90% on most of my projects. And some of them would require even higher probability, say, 95 or 99% ...
Me: Based on that, the project manager, knowing that on average the project in question should take approximately 9 months to finish, must provide you with a 12-month estimate (see Figure 3) just to be 90% sure ...
About the Author
Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East. Read Jamal’s Blog @ www.thinktankconsulting.ca