PMP Exam Prep Power Hour - Episode 27: Estimation ✨

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Join us for an in-depth discussion on estimation in project management, hosted by Saket Bansal. In this episode, we dive into various estimation techniques essential for the PMP exam and practical project management.

🔹 **Introduction to Estimation**
Estimation is crucial for project planning, helping managers forecast time and cost. It's important to distinguish estimates from commitments. While estimates are approximations, commitments are promises based on those estimates. Estimations are inherently prone to errors and must be continuously refined as a project progresses.

🔹 **The Cone of Uncertainty**
We explore the concept of the cone of uncertainty, which illustrates how estimation accuracy improves over time. At the beginning of a project, there's high variability and uncertainty, resulting in broader estimation ranges. As the project progresses and more information becomes available, the cone narrows, indicating increased accuracy.

🔹 **Key Estimation Techniques**
1. **Analogous Estimation** 🕒
- **Definition**: Also known as top-down or rough order of magnitude estimation, this technique uses historical data from similar projects.
- **Application**: Ideal for the initial stages of a project when detailed information is lacking.
- **Pros and Cons**: Quick and easy but less accurate, with potential errors up to ±50%.

2. **Parametric Estimation** 📊
- **Definition**: Uses statistical relationships between historical data and other variables (parameters) to predict future outcomes.
- **Application**: Suitable for projects with quantifiable and consistent parameters, such as construction or manufacturing.
- **Pros and Cons**: More accurate than analogous estimation but requires reliable data and a good estimation model.

3. **Bottom-Up Estimation** 🔍
- **Definition**: Involves estimating individual tasks and aggregating them to form a total project estimate.
- **Application**: Best for detailed planning stages when the project scope is well understood.
- **Pros and Cons**: Highly accurate but time-consuming and resource-intensive.

4. **Three-Point Estimation** 🔢
- **Definition**: Uses three scenarios—optimistic, pessimistic, and most likely—to calculate an average estimate.
- **Application**: Can be applied at any project stage to provide a more balanced estimate.
- **Pros and Cons**: Offers a realistic range but requires good judgment to identify the three scenarios.

🔹 **Estimation in Agile Projects**
In agile methodologies, estimation is performed at both release and iteration levels:

1. **Release Planning** 📅
- **Story Point Estimation**: Teams assign story points based on the complexity and effort required for each task, using techniques like Planning Poker.
- **High-Level Planning**: Provides a roadmap for the product, allowing for adjustments as the project progresses.

2. **Iteration Planning** 🔄
- **Detailed Planning**: Breaks down tasks for the upcoming sprint, estimating in hours or days for greater accuracy.
- **Sprint Backlog**: Focuses on achieving high accuracy (5-10%) for the short-term goals.

🔹 **Practical Tips for Estimation**
1. **Communicate Clearly**: Always share the assumptions and risks associated with your estimates.
2. **Use Historical Data Wisely**: When available, use historical data to inform your estimates, but be mindful of its limitations.
3. **Refine Estimates Continuously**: Regularly revisit and refine your estimates as the project progresses and more information becomes available.
4. **Leverage Tools and Models**: Use estimation tools and models to enhance accuracy, especially for parametric estimation.
5. **Educate Stakeholders**: Help stakeholders understand that estimates are not commitments and why adjustments are necessary.

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#PMP #ProjectManagement #Estimation #ConeOfUncertainty #AnalogousEstimation #ParametricEstimation #BottomUpEstimation #ThreePointEstimation #Agile #StoryPoints #PMPExamPrep #SaketBansal #PowerHour #projectplanning

0:00 Introduction
1:22 What is Estimation
3:52 Cone of Uncertainty
6:37 Types of Estimate
6:52 Analogous Estimate
8:33 Parametric Estimate
11:14 Bottom Up Estimate
13:30 Three Point Estimate
15:30 Story Point Estimation (Release Planning)
18:36 Sprint / Iteration Estimation
20:30 Do we use Top-Down Estimate for Cost Estimates
22:59 How to differentiate Analogous and Parametric Estimate Question in PMP
24:48 Tools or Software to do Estimation
26:28 Managing Stakeholder Expectations related to Estimation
29:49 Difference Between Hard logic and Soft Logic
31:43 Estimation vs Guess Estimate
32:50 Improving Sprint Estimation
34:58 Feedback and Improvement on Estimation
39:49 Story Point Equals to Day
44:35 Why to Estimate sub tasks in hour
50:28 Capacity Vs Story Points
54:48 SAFe Training and Capacity Planning
57:28 Closing