Cost, Value & Investment: How Much Will This Project Cost? Part 2

This post is continued from Cost, Value & Investment: How Much Will This Project Cost, Part 1

We’ve established that you need to know how much this project will cost. I’m assuming you have more than a small project.

If you have to estimate a project, please read the series starting at Estimating the Unknown: Dates or Budget, Part 1. Or, you could get Essays on Estimation. I’m in the midst of fixing it so it reads like a real book. I have more tips on estimation there.

For a program, each team does this for its own ranked backlog:

  • Take every item on the backlog and roadmap, and use whatever relative sizing approach you use now to estimate. You want to use relative sizing, because you need to estimate everything on the backlog.
  • Tip: If each item on the backlog/roadmap is about team-day or smaller, this is easy. The farther out you go, the more uncertainty you have and the more difficult the estimation is. That’s why this is a tip.
  • Walk through the entire backlog, estimating as you proceed. Don’t worry about how large the features are. Keep a count of the large features. Decide as a team if this feature is larger than two or three team-days. If it is, keep a count of those features. The larger the features, the more uncertainty you have in your estimate.
  • Add up your estimate of relative points. Add up the number of large features. Now, you have a relative estimate, which based on your previous velocity means something to you. You also have a number of large features, which will decrease the confidence in that estimate.
  • Do you have 50 features, of which only five are large? Maybe you have 75% confidence in your estimate. On the other hand, maybe all your features are large. I might only have 5-10% confidence in the estimate. Why? Because the team hasn’t completed any work yet and you have no idea how long your work will take.
Technical Program with Communities of Practice

Technical Program with Communities of Practice

As a software program team, get together, and assess the total estimate. Why the program team? Because the program team is the cross-functional team whose job is to get the software product to done. It’s not just the software teams—it’s everyone involved in the technical program team.

Note: the teams have to trust Sally, Joe, Henry and Tom to represent them to the software program team. If the teams do not, no one has confidence in any estimate at all. The estimate is a total SWAG.

The delegates to the program team know what their estimates mean individually. Now, they “add” them together, whatever that means. Do you realize why we will call this prediction? Do Sally, Joe, Henry, and Tom have feature teams, service teams, or component teams? Do they have to add time for the experiments as they transition to agile? Do they need to gain the trust of their management? Or, are they already experienced agile feature teams?

The more experienced the teams are at agile, the better the estimate is. The more the teams are feature teams, the better the estimate is. If you are new to agile, or have feature teams, or have a mixed program (agile and non-agile teams), you know that estimate is way off.

Is it time for the software program manager to say, “We have an initial order-of-magnitude prediction. But we haven’t tested this estimate with any work, so we don’t know how accurate our estimates are. Right now our confidence is about 5-10% (or whatever it is) in our estimate. We’ve spent a day or so estimating, because we can spend time delivering, rather than estimating. We need to do a week or two of work, deliver a working skeletong, and then we can tell you more about our prediction. We can better our prediction as we proceed. Remember, back in the waterfall days, we spent a month estimating and we were wrong. This way, you’ll get to see product as we work.”

You want to use the word “prediction” as much as possible, because people understand the word prediction. They hear weather predictions all the time. They know about weather predictions. But when they hear estimates of work, they think you are correct, even if you use confidence numbers, they think you are accurate. Use the word prediction.

Beware of These Program Estimation Traps

There are plenty of potential traps when you estimate programs. Here are some common problems:

  • The backlog is full of themes. You haven’t even gotten to epics, never mind stories. I don’t see how you can make a prediction. That’s like me saying, “I can go from Boston to China on an airplane. Yes, I can. It will take time.” I need more data: which time of year? Mid-week, weekend? Otherwise, I can only provide a ballpark, not a real estimate.
  • Worse, the backlog is full of tasks, so you don’t know the value of a story. “Fix the radio button” does not tell me the value of a story. Maybe we can eliminate the button instead of fix it.
  • The people estimating are not the ones who will do the work, so the estimate is full of estimation bias. Just because work looks easy or looks hard does not mean it is.
  • The estimate becomes a target. This never works, but managers do it all the time. “Sure, my team can do that work by the end of Q1.”
  • The people on your program multitask, so the estimate is wrong. Have you read the Cost of Delay due to Multitasking?
  • Managers think they can predict team size from the estimate. This is the problem of splitting work in the mistaken belief that more people make it easier to do more work. More people make the communications burden heavier.

Estimating a program is more difficult, because bigness makes everything harder. A better way to manage the issues of a program is to decide if it’s worth funding in the project portfolio. Then, work in an agile way. Be ready to change the order of work in the backlog, for teams and among teams.

As a program manager, you have two roles when people ask for estimates. You want to ask your sponsors these questions:

  • How much do you want to invest before we stop? Are you ready to watch the program grow as we build it?
  • What is the value of this project or program?

You want to ask the teams and product owners these questions:

  • Please produce walking skeletons (of features in the product) and build on it
  • Please produce small features, so we can see the product evolve every day

The more the sponsors see the product take shape, the less interested they will be in an overall estimate. They may ask for more specific estimates (when can you do this specific feature), which is much easier to answer.

Delivering working software builds trust. Trust obviates many needs for estimates. If your managers or customers have never had trust with a project or program team before, they will start asking for estimates. Your job is to deliver working software every day, so they stop asking.

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Cost, Value & Investment: How Much Will This Project Cost? Part 1

I’ve said before that you cannot use capacity planning for the project portfolio. I also said that managers often want to know how much the project will cost. Why? Because businesses have to manage costs. No one can have runaway projects. That is fair.

If you use an agile or incremental approach to your projects, you have options. You don’t have to have runaway projects. Here are two better questions:

  • How much do you want to invest before we stop?
  • How much value is this project or program worth to you?

You need to think about cost, value, and investment, not just cost when you think about about the project portfolio. If you think about cost, you miss the potentially great projects and features.

However, no business exists without managing costs. In fact, the cost question might be critical to your business. If you proceed without thinking about cost, you might doom your business.

Why do you want to know about cost? Do you have a contract? Does the customer need to know? A cost-bound contract is a good reason.  (If you have other reasons for needing to know cost, let me know. I am serious when I say you need to evaluate the project portfolio on value, not on cost.)

You Have a Cost-Bound Contract

I’ve talked before about providing date ranges or confidence ranges with estimates. It all depends on why you need to know. If you are trying to stay within your predicted cost-bound contract, you need a ranked backlog. If you are part of a program, everyone needs to see the roadmap. Everyone needs to see the product backlog burnup charts. You’d better have feature teams so you can create features. If you don’t, you’d better have small features.

Why? You can manage the interdependencies among and between teams more easily with small features and with a detailed roadmap. The larger the program, the smaller you want the batch size to be. Otherwise, you will waste a lot of money very fast. (The teams will create components and get caught in integration hell. That wastes money.)

Your Customer Wants to Know How Much the Project Will Cost

Why does your customer want to know? Do you have payments based on interim deliverables? If the customer needs to know, you want to build trust by delivering value, so the customer trusts you over time.

If the customer wants to contain his or her costs, you want to work by feature, delivering value. You want to share the roadmap, delivering value. You want to know what value the estimate has for your customer. You can provide an estimate for your customer, as long as you know why your customer needs it.

Some of you think I’m being perverse. I’m not being helpful by saying what you could do to provide an estimate. Okay, in Part 2, I will provide a suggestion of how you could do an order-of-magnitude approach for estimating a program.

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Managers Manage Ambiguity

I was thinking about the Glen Alleman’s post, All Things Project Are Probabilistic. In it, he says,

Management is Prediction

as a inference from Deming. When I read this quote,

If you can’t describe what you are doing as a process, you don’t know what you’re doing. –Deming

I infer from Deming that managers must manage ambiguity.

Here’s where Glen and I agree. Well, I think we agree. I hope I am not putting words into Glen’s mouth. I am sure he will correct me if I am.

Managers make decisions based on uncertain data. Some of that data is predictive data.

For example, I suggest that people provide, where necessary, order-of-magnitude estimates of projects and programs. Sometimes you need those estimates. Sometimes you don’t. (Yes, I have worked on programs where we didn’t need to estimate. We needed to execute and show progress.)

Now, here’s where I suspect Glen and I disagree:

  1. Asking people for detailed estimates at the beginning of a project and expecting those estimates to be true for the entire project. First, the estimates are guesses. Second, software is about learning, If you work in an agile way, you want to incorporate learning and change into the project or program. I have some posts about estimation in this blog queue where I discuss this.
  2. Using estimation for the project portfolio. I see no point in using estimates instead of value for the project portfolio, especially if you use agile approaches to your projects. If we finish features, we can end the project at any time. We can release it. This makes software different than any other type of project. Why not exploit that difference? Value makes much more sense. You can incorporate cost of delay into value.
  3. If you use your estimate as a target, you have some predictable outcomes unless you get lucky: you will shortchange the feature by decreasing scope, incur technical debt, or increase the defects. Or all three.

What works for projects is honest status reporting, which traffic lights don’t provide. Demos provide that. Transparency about obstacles provides that. The ability to be honest about how to solve problems and work through issues provides that.

Much has changed since I last worked on a DOD project. I’m delighted to see that Glen writes that many government projects are taking more agile approaches. However, if we always work on innovative, new work, we cannot predict with perfect estimation what it will take at the beginning, or even through the project. We can better our estimates as we proceed.

We can have a process for our work. Regardless of our approach, as long as we don’t do code-and-fix, we do. (In Manage It! Your Guide to Modern, Pragmatic Project Management, I say to choose an approach based on your context, and to choose any lifecycle except for code-and-fix.)

We can refine our estimates, if management needs them. The question is this: why does management need them? For predicting future cost for a customer? Okay, that’s reasonable. Maybe on large programs, you do an estimate every quarter for the next quarter, based on what you completed, as in released, and what’s on the roadmap. You already know what you have done. You know what your challenges were. You can do better estimates. I would even do an EQF for the entire project/program. Nobody has an open spigot of money.

But, in my experience, the agile project or program will end before you expect it to. (See the comments on Capacity Planning and the Project Portfolio.) But, the project will only end early if you evaluate features based on value and if you collaborate with your customer. The customer will say, “I have enough now. I don’t need more.” It might occur before the last expected quarter. It might occur before the last expected half-year.

That’s the real ambiguity that managers need to manage. Our estimates will not be correct. Technical leaders, project managers and product owners need to manage risks and value so the project stays on track. Managers need to ask the question: What if the project or program ends early?

Ambiguity, anyone?

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Capacity Planning and the Project Portfolio

I was problem-solving with a potential client the other day. They want to manage their project portfolio. They use Jira, so they think they can see everything everyone is doing. (I’m a little skeptical, but, okay.) They want to know how much the teams can do, so they can do capacity planning based on what the teams can do. (Red flag #1)

The worst part? They don’t have feature teams. They have component teams: front end, middleware, back end. You might, too. (Red flag #2)

Problem #1: They have a very large program, not a series of unrelated projects. They also have projects.

Problem #2: They want to use capacity planning, instead of flowing work through teams.

They are setting themselves up to optimize at the lowest level, instead of optimizing at the highest level of the organization.

If you read Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, you understand this problem. A program is a strategic collection of projects where the business value of the all of the projects is greater than any one of the projects itself. Each project has value. Yes. But all together, the program, has much more value. You have to consider the program has a whole.

Don’t Predict the Project Portfolio Based on Capacity

If you are considering doing capacity planning on what the teams can do based on their estimation or previous capacity, don’t do it.

First, you can’t possibly know based on previous data. Why? Because the teams are interconnected in interesting ways.

When you have component teams, not feature teams, their interdependencies are significant and unpredictable. Your ability to predict the future based on past velocity? Zero. Nada. Zilch.

This is legacy thinking from waterfall. Well, you can try to do it this way. But you will be wrong in many dimensions:

  • You will make mistakes because of prediction based on estimation. Estimates are guesses. When you have teams using relative estimation, you have problems.
  • Your estimates will be off because of the silent interdependencies that arise from component teams. No one can predict these if you have large stories, even if you do awesome program management. The larger the stories, the more your estimates are off. The longer the planning horizon, the more your estimates are off.
  • You will miss all the great ideas for your project portfolio that arise from innovation that you can’t predict in advance. As the teams complete features, and as the product owners realize what the teams do, the teams and the product owners will have innovative ideas. You, the management team, want to be able to capitalize on this feedback.

It’s not that estimates are bad. It’s that estimates are off. The more teams you have, the less your estimates are normalized between teams. Your t-shirt sizes are not my Fibonacci numbers, are not that team’s swarming or mobbing. (It doesn’t matter if you have component teams or feature teams for this to be true.)

When you have component teams, you have the additional problem of not knowing how the interdependencies affect your estimates. Your estimates will be off, because no one’s estimates take the interdependencies into account.

You don’t want to normalize estimates among teams. You want to normalize story size. Once you make story size really small, it doesn’t matter what the estimates are.

When you  make the story size really small, the product owners are in charge of the team’s capacity and release dates. Why? Because they are in charge of the backlogs and the roadmaps.

The more a program stops trying to estimate at the low level and uses small stories and manages interdependencies at the team level, the more the program has momentum.

The part where you gather all the projects? Do that part. You need to see all the work. Yes. that part works and helps the program see where they are going.

Use Value for the Project Portfolio

Okay, so you try to estimate the value of the features, epics, or themes in the roadmap of the project portfolio. Maybe you even use the cost of delay as Jutta and I suggest in Diving for Hidden Treasures: Finding the Real Value in Your Project Portfolio (yes, this book is still in progress). How will you know if you are correct?

You don’t. You see the demos the teams provide, and you reassess on a reasonable time basis. What’s reasonable? Not every week or two. Give the teams a chance to make progress. If people are multitasking, not more often than once every two months, or every quarter. They have to get to each project. Hint: stop the multitasking and you get tons more throughput.

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People Are Not Resources

My manager reviewed the org chart along with the budget. “I need to cut the budget. Which resources can we cut?”

“Well, I don’t think we can cut software licenses,” I was reviewing my copy of the budget. “I don’t understand this overhead item here,” I pointed to a particular line item.

“No,” he said. “I’m talking about people. Which people can we lay off? We need to cut expenses.”

“People aren’t resources! People finish work. If you don’t want us to finish projects, let’s decide which projects not to do. Then we can re-allocate people, if we want. But we don’t start with people. That’s crazy.” I was vehement.

My manager looked at me as if I’d grown three heads. “I’ll start wherever I want,” he said. He looked unhappy.

“What is the target you need to accomplish? Maybe we can ship something earlier, and bring in revenue, instead of laying people off? You know, bring up the top line, not decrease the bottom line?”

Now he looked at me as if I had four heads.

“Just tell me who to cut. We have too many resources.”

When managers think of people as resources, they stop thinking. I’m convinced of this. My manager was under pressure from his management to reduce his budget. In the same way that technical people under pressure to meet a date stop thinking, managers under pressure stop thinking. Anyone under pressure stops thinking. We react. We can’t consider options. That’s because we are so very human.

People are resourceful. But we, the people, are not resources. We are not the same as desks, licenses, infrastructure, and other goods that people need to finish their work.

We need to change the language in our organizations. We need talk about people as people, not resources. And, that is the topic of this month’s management myth: Management Myth 32: I Can Treat People as Interchangeable Resources.

Let’s change the language in our organizations. Let’s stop talking about people as “resources” and start talking about people as people. We might still need layoffs. But, maybe we can handle them with humanity. Maybe we can think of the work strategically.

And, maybe, just maybe, we can think of the real resources in the organization. You know, the ones we buy with the capital equipment budget or expense budget, not operating budget. The desks, the cables, the computers. Those resources. The ones we have to depreciate. Those are resources. Not people.

People become more valuable over time. Show me a desk that does that. Ha!

Go read Management Myth 32: I Can Treat People as Interchangeable Resources.

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Agile Bootcamp Talk Posted on Slideshare

I posted my slides for my Agile 2014 talk, Agile Projects, Program & Portfolio Management: No Air Quotes Required on Slideshare. It’s a bootcamp talk, so the majority of the talk is making sure that people understand the basics about projects. Walk before you run. That part.

However, you can take projects and “scale” them to programs. I wish people wouldn’t use that terminology. Program management isn’t exactly scaling. Program management is when the strategic endeavor  of the program encompases each of the projects underneath.

If you have questions about the presentation, let me know. Happy to answer questions.

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How to Avoid Three Big Estimation Traps Posted

I sent a Pragmatic Manager email last week, How to Avoid Three Big Estimation Traps. If you subscribed, you’d have seen it already. (That was a not-so-subtle hint to subscribe :-)

If you’re not sure of the value of being on yet-another-email list, browse the back issues. You can see I’m consistent. Not about the day I send the Pragmatic Manager email. I can’t make myself be that consistent. I provide you some great content. I tell you where I’m speaking. I let you know where you can read my writing, and how to find more of my work. That’s it.

In any case, take a look at How to Avoid Three Big Estimation Traps. I bet you’ll like it!

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How Pairing & Swarming Work & Why They Will Improve Your Products

If you’ve been paying attention to agile at all, you’ve heard these terms: pairing and swarming. But what do they mean? What’s the difference?

When you pair, two people work together to finish a piece of work. Traditionally, two developers paired. The “driver” wrote the piece of work. The other person, the “navigator,” observed the work, providing review, as the work was completed.

I first paired as a developer in 1982 (kicking and screaming). I later paired in the late 1980’s as the tester in several developer-tester pairs. I co-wrote Behind Closed Doors: Secrets of Great Management with Esther Derby as a pair.

There is some data that says that when we pair, the actual coding takes about 15-20% longer. However, because we have built-in code review, there is much less debugging at the end.

When Esther and I wrote the book, we threw out the original two (boring) drafts, and rewrote the entire book in six weeks. We were physically together. I had to learn to stop talking. (She is very funny when she talks about this.) We both had to learn each others’ idiosyncrasies about indentations and deletions when writing. That’s what you do when you pair.

However, this book we wrote and published is nothing like what the original drafts were. Nothing. We did what pairs do: We discussed what we wanted this section to look like. One of us wrote for a few minutes. That person stopped. We changed. The other person wrote. Maybe we discussed as we went, but we paired.

After about five hours, we were done for the day. Done. We had expended all of our mental energy.

That’s pairing. Two developers. One work product. Not limited to code, okay?

Now, let’s talk about swarming.

Swarming is when the entire team says, “Let’s take this story and get it to done, all together.” You can think of swarming as pairing on steroids. Everyone works on the same problem. But how?

Someone will have to write code. Someone will have to write tests. The question is this: in what order and who navigates? What does everyone else do?

When I teach my agile and lean workshop, I ask the participants to select one feature that the team can complete in one hour. Everyone groans. Then they do it.

Some teams do it by having the product owner explain what the feature is in detail. Then the developers pair and the tester(s) write tests, both automated and manual. They all come together at about the 45-minute mark. They see if what they have done works. (It often doesn’t.) Then the team starts to work together, to really swarm. “What if we do this here? How about if this goes there?”

Some teams work together from the beginning. “What is the first thing we can do to add value?” (That is an excellent question.) They might move into smaller pairs, if necessary. Maybe. Maybe they need touchpoints every 15-20 minutes to re-orient themselves to say, “Where are we?” They find that if they ask for feedback from the product owner, that works well.

If you first ask, “What is the first thing we can do to add value and complete this story?” you are probably on the right track.

Why Do Pairing and Swarming Work So Well?

Both pairing and swarming:

  • Build feedback into development of the task at hand. No one works alone. Can the people doing the work still make a mistake? Sure. But it’s less likely. Someone will catch the mistake.
  • Create teamwork. You get to know someone well when you work with them that intensely.
  • Expose the work. You know where you are.
  • Reduce the work in progress. You are less likely to multitask, because you are working with someone else.
  • Encourage you to take no shortcuts, at least in my case. Because someone was watching me, I was on my best professional behavior. (Does this happen to you, too?)

How do Pairing and Swarming Improve Your Products?

The effect of pairing and swarming is what improves your products. The built-in feedback is what creates less debugging downstream. The improved teamwork helps people work together. When you expose the work in progress, you can measure it, see it, have no surprises. With reduced work in progress, you can increase your throughput. You have better chances for craftsmanship.

You don’t have to be agile to try pairing or swarming. You can pair or swarm on any project. I bet you already have, if you’ve been on a “tiger team,” where you need to fix something for a “Very Important Customer” or you have a “Critical Fix” that must ship ASAP. If you had all eyes on one problem, you might have paired or swarmed.

If you are agile, and you are not pairing or swarming, consider adding either or both to your repertoire, now.

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What is Your Minimum Agile Reading List?

In preparation for my talk, Agile Projects, Programs, and Portfolio Management: No Air Quotes Required, I have created a Minimum Reading List for an Agile Transition. Note the emphasis on minimum.

I could have added many more books to this list. But the problem I see is that people don’t read anything. They think they do agile if they say they do agile.

But saying you do agile doesn’t mean anything if you don’t get to done on small stories and have the ability to change. I hope that if I suggest some small list of potential books, people will read the books, and realize, “I can do this!”

I am probably crazy-optimistic. But that hasn’t stopped me before.

I would like your help. Would you please review my list? Do you have better books? Do you have better suggestions? It’s my list. I might not change my mind. However, if you comment on that page, I would know what you think.

Thank you very much.

 

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Why Testing in Women Testers Magazine

I have an article in a new online magazine, Women Testers, the July 2014 edition. My article is called “Why Testing?”

When I was a tester or a developer, I asked many questions. As a project manager, program manager or consultant, I still ask many questions. One of those is the Why question. This article examines that question from a number of perspectives.

Go read that article and many others from people such as Alexandra Moreira, Bolette Stubbe Teglbjærg, Smita Mishra, Sara Tabor, Karen N. Johnson, and Mike Lyles.

I bet you’ll enjoy it!

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