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Parametric estimating This type of estimating uses a cost per unit (quantifiable/ mathematical) model, such as cost per square foot (for a construction project), cost per line of code (for a software development project), and units per hour (for a manufacturing project) to determine how long an activity will take You simply multiply the cost per unit (price) by the quantity (P*Q) to get the estimated amount of work to determine the overall cost Three-point estimate In the real world, the probability of completing a project on a set date (especially when change is inevitable) is pretty low Therefore, the best way to determine the range of estimating accuracy is to estimate the probable date using a three-point estimate A weighted average is used to estimate the three times (or costs) Here is how it works: A subject matter expert (SME) who is very familiar with the activity estimates the best (optimistic = O), worst (pessimistic = P), and most likely (ML) time or cost to perform the activity Then you use the following formula to calculate the three-point estimate: (P + (4*ML) + O)/6 Note that PMI refers to the three-point time estimate as a PERT estimate along with two other formulas that may appear on the PMP exam for activity duration and cost estimating (see Figure 6-10) It would be a good idea to memorize them Also note that PMI has changed the look of the formula not the concept (see PMBOK page 150)

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Three-point estimate for an activity: (P + 4ML + O) 6

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equal sign for you, followed by the function and an opening parenthesis If you typed the equal sign instead, press y to open a list of functions beginning with that letter Use the arrow keys, if necessary, to highlight YEAR and press tab This enters the function name followed by a parenthesis If you both type an equal sign and use the Insert Function dialog, PowerPivot is clever enough not to insert a second equal sign Type the letter o and use the arrow keys, or mouse, to select Orders[OrderDate] Press tab to insert this column name Type a closing parenthesis and notice how it and the first opening parenthesis are highlighted This is very useful as it helps you to balance left and right parentheses in more complex formulas To check your syntax, click the small check mark button in the formula bar To accept and apply your syntax, press enter To back out, press esc or click the small cross button

Note: To estimate duration for the project, you need to add up the activity estimates on the critical path and because statistically you can t add standard deviations, you must calculate the variances for the activities

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P(R+D) P R D/R) = ii%

Should you require more room in which to work, you can drag the lower edge of the formula bar downward If you want your formula to appear on more than one line, press alt-enter Working on a DAX formula as a measure is similar First you click the New Measure button in the PowerPivot ribbon in Excel This opens the Measure Settings dialog, which is shown in Figure 4-2 In this dialog you can also access the Insert Function dialog the function button is just to the right of the Formula caption You check syntax by clicking the Check Formula button You can back out by pressing esc or clicking Cancel You can enlarge the typing area by resizing the whole dialog You apply the formula by pressing enter or clicking OK

You have driven the same route to work for the past three years, so you are the SME on how long the trip takes You have determined it takes you 45 minutes to get to work on a good (optimistic) day (with good weather and minimum traffic) On a poor-weather or heavy-traffic day, it takes as long as 75 minutes However, the most likely drive time is one hour (60 minutes) Plugging these numbers into a three-point formula results in the following: (45 + (4 * 60) + 75)/6, or (45 + 240 + 75)/6, or 360/6 = 60 Therefore, knowing the three-point formula, what do you get Answer: It will take one hour (60 minutes) on average to drive to work

Figure 4-2

Reserve analysis This technique is used to estimate the cost of project activities Depending on the results of the reserve analysis, dollars can be set aside (called contingency or management reserves) to be used to cover risk events that are likely to affect schedule and cost This topic is discussed in more detail in 7

Schedule development is where the rubber meets the road, so to speak It s where the schedule management work really begins, and the results of this process will have a huge impact on your project management capability and credibility Once you have a network diagram and activity and resources estimates, it is time to put the information into a schedule (The difference between a time estimate and a schedule is that the schedule is calendar based)

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