How to Move from #NoEstimates to Good Estimating Practices Using Data

#NoEstimates Does Not Feed The Machine!

#NoEstimates is the attitude of reducing focus on estimating, committing to, and hitting estimates.

This arguably works for software developers and similar roles, as well as small groups with a powerful executive protecting them.  It most decidedly does not work for what we call “The CFO Side of the House” or “The Machine.”  Having filled so many roles between business analyst, developer, project manager, director, VP, and COO/CIO several times, I can tell you the story has many sides.

This post discusses our experience with #NoEstimates and doing all manner of estimates from “The CFO Side of the House” for both commercial and public agencies.

What is “The CFO Side of the House” aka “The Machine?”

“The CFO Side of the House” is what I call “The Machine” that needs cost, FTE (Full-time Equivalents), facilities, overhead, and other types of budget numbers.  In commercial and some government implementations, actuals are compared to estimates and any material variances must be explained.  Too much variance causes a disturbance in the force and must be tamped down early and often.

If costs are higher than expected it causes forecasted revenue to drop.  When revenue drops, profit (or the government numbers jumble) drops and this causes stock prices (or other measures of value) to drop.  CFO’s spend a lot of their resources attempting to smooth expense/capital vs. profit so that steady growth is shown quarter over quarter and year over year.  Anything that threatens this stable climb is highly suspect.  Numbers are asked, numbers are given, and we live within them or ask for more at our peril.

Three Quick Ways to Beat This Game

1. Using Data (Actuals) – As you plan your projects and other efforts, just use these “Magic Words.”  In your estimating ask: Instead of, “How long do you think this will take?” switch to “How long did a similar task take last time?”  To ease future estimating burden, you simply must keep track of actuals.  We have a system that does not intrude much on the Agile process that quickly improves estimates, especially if your Sprints are short (1-2 weeks).  To summarize, use t-shirt sizing (or any method really) and simply use a rolling average.  To get more accurate, you can add an experience factor if your team tech strength varies by task or if you wish to outsource.  Yes, this requires a spreadsheet, so use your Scrum Master or Project Manager and keep the development team from having data entry duty.  We have been asked several times to just take over estimating, once each Backlog Item has been discussed, as it saves soooooo much time and keeps the emotion and politics out of it.
2. Use Contingency – Add so much buffer that you will seldom be late, and use the rest to ensure your customer is satisfied.  This requires someone strong enough to sell estimates to management.  The game is, management does not want any loafing and developers do not want undue pressure that damages the product.  A tightrope.
3. Be Vague or Flexible on Scope – This way you simply carve out what will not fit.  Agile, actually, has Scope as the most flexible project dimension so this is really the Agile way.  It may cause executive heartburn, but so does missing estimates.  I was once asked how can we possibly budget for an Agile project.  My answer surprised them.  You have a fixed team (usually) and a fixed Sprint duration with variables being either the number of Sprints or Scope or both.  You have 5 people at set rates for Sprints of 2 weeks, perhaps 8 of them, so the math is easy.  It is when you try to control all three of the triple constraint that trouble arises.  Scope, Time, and Cost.  Pick any two and things work smoothly.

Estimating is like any other method, you should only do it when the ROI is high enough to beat out all other work you could be doing.  This includes the worth to the organization, not just the worth to the team member.  If your estimation process has become negative to the extent you feel it is causing adverse motivation in any of your staff, give us a call or email Info@DataAnalysis.com and we can help you get back in control without wasting time.

#NoEstimates or Data? – Your Thoughts?

Let’s hear some of the ways you handle estimating when you are not really sure and how did that work for you?  We will add the best ones to our best practices!  Good luck and keep your numbers in mind, rest assured everyone else is!

Your path to business success.