PMI RMP – TOOLS AND TECHNIQUES –ADVANCED part 3
- THREE-POINT ESTIMATING
Hi and welcome to a new important tool and technique. The three point estimating. Used as an estimation technique, it falls into the estimation techniques category. It’s used only in two processes of the 49 project management processes the estimate activity durations as a part of the skid, your management knowledge area and estimate costs as a part of the cost management knowledge area and both falls into the planning process group. So what’s the general definition of the three point estimating? The accuracy of a single point duration estimates may be improved by considering estimation of uncertainty and risk. So this is why we perform the three point estimating to consider the uncertainty and risk associated with the activity you are doing the calculations for.
Using the three point estimates helps define an approximate range for an activity duration or cost. You will have an approximate range from two. This activity will cost me from $2,000 up to $2,400. This is the range of estimate you would have once you perform the three point estimating. This is a great technique to use when you need to account for uncertainty in your estimates, either cost estimates or duration estimates. When a lot of uncertainty, risk or unknowns surround an activity or a work package, three point estimating will give you a range of outcomes at an expected duration or cost estimates. It is called three point estimating because you start with three estimates. It’s based on three points. The first estimate represents the best case scenario.
It’s also known as an optimistic estimate. The next is what you consider the most likely scenario and the last is what you consider the worst case scenario. It’s also called the pessimistic estimate. Notice that we use the word scenario. This is because you are developing estimates based on the assumed situation. We are still in the planning. We are doing assumptions to find out these estimation. The first point out of the three points is the optimistic estimate. It’s the optimistic scenario. It means that you have all your required resources, nothing goes wrong, everything works the first time and there are no risks or issues that occur. The best case scenario, everything is going very well. There are no issues, no risks, no problems. All the resources are available, all the resources performing the activity are proficient.
This is the optimistic estimate. The second one is the most likely estimate. It’s the most likely scenario that accounts for the realities of project life, such as someone being called away for an extended period, work interruptions, things not going exactly as planned and a few issues occur. The third point is the pessimistic estimate. It assumes unskilled resources or not enough resources, much reward, delays in work getting done, and multiple risks and issues occur. So these are the three basis for the three point estimating technique. The O, the optimistic, the M, the most likely and the P is the pessimistic estimate. The simplest way to develop a three point estimate is to sum the three estimates and divide by three. This is what we called earlier, the simple average.
This gives you an average. However, this is not the most accurate way because it assumes an equal probability that the optimistic estimate, the most likely estimate and the pessimistic estimate would occur. And that’s not realistic at all in your practical life. In project management, in reality, the most likely estimates has a greater chance of occurring than either the best case or the worst case scenarios. Therefore, a more accurate technique is to weight the most likely scenario and take a weighted average. So the one described in this paragraph is called the simple average, the triangle distribution, as I explained earlier in the schedule management knowledge area and in the math section, this is called the simple average or the triangle distribution p plus m plus o divided by three.
The one described in this paragraph is also called the pert estimate or the weighted average.The most frequent method of calculating a weighted average using the three point estimating is oh, optimistic plus four by the most likely plus the pessimistic divided by six. This is the weighted average you will use for the exam questions. While the distribution equation above is the most frequently used, it’s certainly not your only option if you have historical data with a new organization or expertise available that shows that the likelihood of the optimistic pessimistic and most likely estimates is different than you use those distributions.
So the most frequently used one for the weighted average is the optimistic plus four by the most likely plus the pessimistic divided by six. If your organization has its own historical data, its own expertise, you can modify, you can tolerate this equation. How? For example, you may have historical data that shows that the last 20 times you have performed a similar activity, the optimistic estimate was valid for four times. Four times out of the 20 times the optimistic estimate was valid, the most likely was closer to accurate eight times out of the 20 times and the pessimistic was closer to accurate eight times as well. So from this equation you would use an equation that reflected your experience.
You will give two times for that pessimistic estimate and for the most likely out of the 20 times, four times was for the optimistic, eight times was for the pessimistic and eight times was for the most likely. So I will give the double consideration for the pessimistic and for the most likely estimates. Then the average or the weighted average formula will becomes all plus two and plus two p divided by five. It’s one plus two plus two, it’s all five. This is why I’m dividing by five. You created this formula or this equation based on the historical data available within your organization. Now, don’t be confused. Don’t be confused for the exam, use this formula in your practical life.
I’m just giving you a hint that you can rectify this formula based on the historical data available within your organization. Now, what are the steps you need to follow while performing the three point estimating? We have three simple steps. First of all, you need to interview the people who will be doing the work for which you are developing an estimate. Let’s assume you are doing an estimate for the painting activity on your project. You will need to meet the supervisor of the painters on the project, the people who will actually do the work on the project. These people will give you the most accurate estimates. You need to talk with them about what the cost or duration estimate would be if everything went well.
This is the optimistic estimate, the best case scenario. Discuss what everything going well with life would look like. Then you need to ask them what they expect will happen. This is the most likely estimate given the current environment and their experience with this type of work. Then last, you need to ask them what the cost or duration estimate would be if there were a lot of challenges, and get an idea of what those challenges could be. So you need to interview the people who will do the work to get the three figures, the pessimistic estimate, the optimistic, and the most likely. The second step is to determine your weighting factors regarding the three points.
The most commonly used one is the optimistic plus four for the most likely, plus the pessimistic divided by sex. Or if you prefer an equation that uses a different weighting method, apply that along with your rational and assumptions for your waiting decisions based on the historical data and your own expertise. If you don’t have such historical data, then follow the most commonly one and give a high consideration for the most likely estimate. The last step would be to apply the calculations to determine the expected outcome, expected cost, or expected duration. This is all for the three point estimation technique. Thank you so much and see you at the next lecture.
- SWOT ANALYSIS
Hi and welcome to a new tool and technique. The swap analysis. S refers to strength, w two weaknesses o two opportunities and t to threats. It’s one of the data analysis techniques. It’s in the category of the data analysis techniques. It’s used only in project management in the identify risks process as a part of the risk management efforts on the project. SWAT stands for strengths, weaknesses, opportunities and threats. It’s often used in product development projects to help build a business case. So SWOT analysis is primarily used in the business analysis field in the pre project work. In developing the business case, the business value, the benefits management plan of the project, it’s commonly used while for project management and it’s also performed by the business analysis, not by the project manager.
Most of the time it can also be used for a risk assessment prior to authorizing a project. While you are creating the project charter, you can use the SWOT analysis to perform a high level risk assessment or it can be used during the project in the planning phase. In order to identify the project risks. A SWOT analysis looks at internal and external aspects of an organization internal factors. They are the organization’s strengths and weaknesses. So when you are looking for strength and weaknesses, you will look to the internal factors within the organization. If you are looking for opportunities and threats for the organization, you should look to the external factors to the external environment.
For purposes of SWAT analysis, we will consider the following first of all, strengths are those aspects of the organization within the organization in turn to the organization that can give it an advantage or those things the firm does it to win. These are the strengths. Weaknesses are those aspects that put an organization at a disadvantage in the marketplace, to the peers, to the competitors or those areas that require improvement. Opportunities are aspects in the external environment that an organization can take advantage of or exploit to improve its business position. So the strengths and weaknesses are internal to the organization. For the opportunities, we will look to the external environment.
Threats are aspects of the external environment that could impede or negatively impact the organization’s business position. Now, where shall you look to identify the strengths and weaknesses of your organization? First of all, to the human resources within your organization. Do you have the skill sets and availability you need? Physical Resources do you have the right location, equipment, supplies and materials? So the human resources are physical resources are potential to identify your organization’s strengths and weaknesses.
Finances do you have an adequate funding stream? What’s your position financially? Systems are your systems and processes adiquit Expertise do you have the experience and expertise required to manage the project to develop the project? Now, when you want to identify the opportunities and threats you will lock to the external environment, first of all, to the political environment is the political environment favorable for what you are trying to achieve? Is it stable or unstable? Friendly or unfriendly? This is a potential area to find out.
Threats or Opportunities if you are building your product in a very stable country, the economy is the economy in the markets you are in healthy or declining exchange rate if you are working on an international project, you are importing some materials from outside your country. Is the exchange rate of your currency to the foreign currency in your favor or not? Trends in your industries your industry growing or declining? If you are working, for example, in the Gulf area now in the GCC market and you are working in the construction project, this might be a threat because the construction projects now or the construction industry in the GCC is declining.
It’s not growing. The Location does your location give you an advantage or a disadvantage at the end? We have the regulations. Are there legal requirements that constrain your options or enable you to excel? So when you are looking for opportunities and threats, you just look around your organization in the external environment where your project is running. When you are looking for strengths and weaknesses, you will look inside your organization for the resources, for the finances, for the expertise and so on. Now use the steps below as a guideline and tailor the steps as necessary to work within your environment. First of all, you need to identify the strengths and weaknesses and turn them to the project or organization.
This is the first step. Highlight your strengths and weaknesses that are available within your organization. Identify the opportunities and threats. Experiment with organization. Now is the time to look to the external environment to look for the opportunities and the threats. Assess how the strengths can be turned into opportunities or used to minimize the threats. The strengths of your organization can be used to exploit the opportunities or to reduce or mitigate the threats. Determine how the weaknesses can hinder opportunities or increase threats. These are the four simple steps of performing the swap analysis. It’s a very important and useful technique when it comes to the risk identification. Thank you so much. I’ll see you at the next left.
- MIND MAPPING
Hi and welcome to a new tool and technique, the mind mapping. Mind mapping you are drawing a map so it’s for sure a data representation technique. Whenever you are converting some data into maps, diagrams or visual representation, it’s considered as a data representation technique. It’s used in three processes collect requirements as a part of the scope management plan, quality management as a part of the quality management plan, stakeholder engagement as a part of the stakeholder management knowledge area. So it’s used in three processes of the 49 project management processes.
Now, a mind map is an easy way to brainstorm thoughts organically without worrying, without considering about the order and structure of the thoughts you are brainstorming. So this is the core value of performing the mind map. There is no need to worry about the order and the structure of the thoughts you are drawing. It allows you to visually structure your ideas to help with analysis and recall. It will allow you to make a visual structure of all the ideas in your mind. A mind map is a technique that starts with an idea or a project in the center as the map shown in front of you. Now this is the idea or the project.
You will put it here in the center. Then you will branch out from the project and identify the main themes or deliverables associated with an idea. So for this example, we have four ideas here. Each theme or deliverable has further details. The branching out continues until you have completed mind map that provides an overview of the entire project or elements of a project under analysis.So the map completed in front of you, you will start with the subject here. Then you will have themes and deliver problems. Then you will have sub ideas and you will keep going on until you have the complete map of what you are thinking about, about what you are brainstorming about.
Mind mapping is a diagrammatic method used to visually organizing information. A mind map. Map inequality is often created around a single equality concept drawn as an image in the center of a black landscape page to which associated representations of ideas such as images, words and parts of words are added. The mind mapping technique may help in the rapid gathering of project quality requirements, constraints, dependencies and relationships. So it’s very useful in quality management for fast or quick or rapid gathering. There is a software that’s designed specifically for mind mapping.
You can just as easily use sticky notes so that you can move them around until you settle on a final mind map. If you want to be creative, you can draw, use icons, work with different colored markers and paste pictures on your mind map. Mind mapping can be a very creative and fun way to fill out a project, deliverables or requirements. Now, to perform the mind mapping we have simple four steps. You can start with the central idea develop the major branches or categories associated with the main idea, fill in the branches with the details about the idea rearrange and fill in as needed until the resulting mind map is fully completed. This is all for the mind mapping. Thank you so much. I see you at the next lecture.