Estimating Completion versus Level of Effort

In almost every project there are some WBS elements for which the tasks and activities of a deliverable cannot be scoped with certainty. Estimates for cost accounts of this type are called "level of effort." Level of effort describes a concept of indefinite scope and application of "best effort" by the provider. How then to contain the risk of the estimate? We call on three-point estimates, a sober look at the most pessimistic possibilities, and the use of statistical estimates to get a handle on the range of outcomes.

Completion estimates are definitive in scope, though perhaps uncertain in total cost or schedule. After all, even with a specific scope there are risks. Nevertheless, completion estimates have a specific inclusion of tasks, a most likely estimate of resource requirement, and an expectation of a specific and measurable deliverable at the end. In the examples presented in this chapter, the underlying concept is completion.

Let us consider a couple of examples where level of effort is appropriate. Project management itself is usually assigned to a WBS cost account just for management tasks. Although there are tangible outcomes of project management, like plans, schedules, and budgets, the fact is that the only real evidence of successful completion of the cost account is successful completion of the project. Work packages and cost accounts of this type are usually estimated from parametric models and "similar-to" estimates, but the total scope is indefinite.

Research and development efforts for "new to the world" discoveries are an obvious case for level of effort, particularly where the root problem is vague or unknown or where the final outcome is itself an "ah-hah!" and not specifically known in advance. In projects of this type, it is appropriate to base funding on an allocation of total resources available to the business, set somewhat short-term milestones for intermediate results, and base the WBS on level of effort tasks. If prior experience can be used to establish parameters to guide the estimating, then that is all to the advantage of the project sponsor and the project manager.

Team LiB

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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