Value of Estimating Performance

Earned Value starts with a detailed scope coupled with a planning group proficient in estimating practices, utilizing benchmarking tools, metrics and expert judgment.  

Once the scope has been identified and work orders created decomposition, planning and detailed cost estimating begins. It is the function of the Planning Group to ensure all work orders (deliverables) are planned to meet the level of detail necessary to locate all items and/or asset, identify materials, tools, risks, labor and nonlabor resources to prepare and execute the scope of the work package.

The decomposition of scope broken down to a level of confidence requires training, familiarity with operating environment, organizational process assets and enterprise environmental factors. Too often we seem to underestimate the value of the Planner role and the experience required to understand the functional and context of estimating the elements required to deliver.

The outputs of not planning and estimating effectively impact every aspect of each deliverable from safety, quality to cost and time. The net effect is the deterioration of confidence, inability to identify and manage risks, costs and resource requirements negativity impacting efficiency and productivity.

Most often we us a single point estimate based on expert judgment, sometimes referring to historical data, for activities that may be more challenging, guessing. The shortcomings of the single point estimate factors inspire padding which creates unbelievable schedules and discredits the planning group. Essentially single point estimates are, typically, unreliable. However if it is a Rough Order of Magnitude estimate that is requested the single point or Analogous Estimate may suffice.  The recommendation with this type of appraisal is to supply a range rather than a single number.

Common estimating techniques that provide more reliable values include Parametric and PERT Analysis. The caveat to this is the foundation is built on historical data and statistical relationships respectively.

Parametric estimating calculates projected duration to complete an activity established from a database of historical information. The output is an activity estimate based on time per square foot, time per linear foot or time per cubic foot. For example, we have derived from our database one scaffold crew can build a freestanding tube and clamp type scaffold at a rate of 250 ft3/hr. We can then determine it should take 4 hrs to erect a 10’x10’x10’ scaffold.

PERT estimating can be somewhat more involved when comparing to Analogous and Parametric estimating techniques. The benefit to this type of estimate is the quantification of risk. Subject matter experts understand the environment and condition in which the activities are to be executed. Essentially PERT is a three point estimate based on levels of assumed risk. The planner is required to provide an Optimistic, Pessimistic and Most Likely estimate for each activity. The values of O,M,P are weighted based on risk then averaged to produce the expected duration.

In order provide an accurate scenario for estimating the overall duration of a Turnaround or Project bottom up estimating methodology utilizing subject matter experts with the application of estimating tools will improve schedule management and enable managers to better assess risks. The main output is more control by creating confidence and providing adequate information to which satisfactory decisions are produced.

Utilizing robust systems coupled with subject matter experts Planning, Estimating and Scheduling will enable Turnaround success. Understanding the experience and academic bench mark is a moving target...for more insight view past posts - "Planners - An Industry Challenge" and "Planner Struggle...closing the gap".