Improve your ROI using RiskBased Estimating

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Improve your ROI using Risk-Based
Estimating David M. Sides, Vice President Sogeti
USA, LLC
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Agenda

• Who am I? Who is Sogeti?
• Why are you here today?
• What you will not hear today
• What you will hear today
• RBE, ROI, RBS
• RBE Process
• Top 10 RBE Tips
• QA

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Sogeti Worldwide Global reach, Local touch

• A multi-national, premier provider of IT and
  Project Management services
• 15,000 experienced professionals worldwide
• Wholly owned Capgemini SA company

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Sogeti USA facts figures

• Atlanta
• Baltimore
• Chicago
• Cincinnati
• Cleveland
• Columbus
• Dallas
• Dayton (U.S. Headquarters)
• Des Moines
• Detroit
• Houston
• Indianapolis
• Kansas City
• Minneapolis

• New York/New Jersey/Connecticut
• Omaha
• Orlando
• Portland
• Seattle
• St. Louis
• Washington D.C.

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Sogeti Committed to Delivery Excellence

• Leading provider of IT and Project Management
  services in a wide spectrum of industries for 35
  years
• Extreme commitment to Project Management 138
  PMPs in USA and growing
• Global reach, Local delivery
• Specialized solutions through comprehensive
  service offerings
• Proven Deliver Quality Management System built
  on decades of experience and Best Practices
• Rigorous client satisfaction measurement process
  (OTACE On Time and At Client Expectations)
• Flexible delivery options, based on client
  requirements preferences
• On-site client location
• Off-site Sogeti USA delivery centers
• Offshore Sogeti worldwide delivery centers
• Agile, adaptable delivery methodology tailored to
  the engagement
• We apply the appropriate amount of process to the
  program and projects no more, no less to
  deliver measurable benefits on-spec, on-time, and
  on-budget.
• Plan the workwork the Plan We plan to be
  pro-active, identify and mitigate problems
  quickly and effectively.

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Solutions as unique as you are

• Applications Management
• Business Intelligence
• Compliance Services (Sarbanes-Oxley, etc.)
• IBM Solutions (BI, Data Migration, RPM)
• Microsoft Solutions
• Microsoft Application Development and Migration
  Solutions
• Microsoft SQL Server Solutions
• Microsoft Enterprise Project Management Solutions
• Microsoft Information Worker Solutions
• Microsoft Infrastructure Solutions
• Microsoft Business Solutions
• Migration Services
• Product Lifecycle Management
• Project Delivery Services
• Software Control Testing

We PARTNER with our clients to develop and deploy
unique solutions to help them achieve their
strategic business objectives.
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Why are you here today?

• You estimate, but want more consistent results
• You estimate, but do not use a Risk-Based
  approach
• You face the following challenges
• Project results (time, cost, quality) are less
  than desirable
• Project ROI is unknown, unrealistic, or untracked
• You are being asked to do more with less
• You are being given fixed project end dates
• Changing project requirements, complex technology
  and environments, outsourced initiatives,
  matrixed resources -- exceed the current schedule
  to deliver
• You dont estimate you just start coding (I hope
  not!)

For the food and the PDUs!
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What you will not hear today

• The usual estimating tools techniques, like
• PMBOK Guide
• Expert judgment
• Analygous estimating
• Parametric estimating
• 3-Point (ML/O/P) estimating
• Other
• 50/50 estimates
• Raw estimates
• Activity estimating
• WBS Work package estimating
• Top-down estimating
• Bottom-up estimating
• Work effort vs. Duration estimating

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What you will hear today

• Estimate (PMBOK Guide)
• A quantitative assessment of the likely amount or
  outcome, usually applied to project costs,
  resources, effort, and durations.
• It is usually preceded by a modifier (i.e.
  preliminary, conceptual, feasibility,
  order-of-magnitude, definitive).
• It should always include some indication of
  accuracy ( or x percent) for the known
  unknowns or adjustment factors.
• Risk
• An uncertain event or condition that, if it
  occurs, has a positive or negative effect on a
  projects objectives.
• Cone of Uncertainty
• The further into the future estimates and plans
  are projected, the greater the number and impact
  of unknown factors.
• Estimating disclaimer
• There are no magic potions, no silver bullets, no
  guarantees an estimate is just that an
  estimate.

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RBE, ROI, RBS What are they?

• RBE Risk-Based Estimating
• Use Risks as the basis for more accurate
  estimatingas simple as that.
• Risks are actually negative Assumptions.
• Proactive Risk Monitoring drives iterative
  re-estimating throughout the project life cycle.
• Once Risks become Issues (like Scope Creep), your
  estimates are reactive and usually too late.
• ROI Reality On Investment
• ROI is typically called Return On Investment.
• Bring Reality back into our estimates by
  identifying and quantifying risks to our
  projects.
• RBS Risk Breakdown Structure
• Identify Risk Categories for your projects.
• Create a hierarchical structure of categories to
  help with Risk Identification.

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RBS Risk Breakdown Structure
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Risk Focus

• Business risk involves the potential impact the
  project has on the business, and may include such
  areas as

• How dynamic are the requirements
• Is there a definitive project sponsor and owner
• Are the requirements based on a consensus
• The project is directly linked to the
  organizations existing or future business
  strategy
• The project time line is inflexible or
  unrealistic
• The project involves multiple parties or vendors

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Risk Focus

• Technical risk addresses the technology involved
  in architecting the project, and may include

• New technology to the organization
• Technology requirements that are not proven
• Limitations on available technical resources
• Estimates are not detailed or validates
• Work breakdown structures are not well defined
• The technical architecture has not been developed
  from business requirements (e.g., it has been
  prescribed or forced based on legacy settings)

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Risk Focus

• Business and technical risks must be quantified
  and decisions made

• Accept it - then factor in the cost
• Mitigate it - then develop the mitigation
  plan.There still will be costs
• Outsource it - then ensure the transfer is a fair
  exchange and well-documented
• Not Proceed risks are too high
• and mitigating tactics to costly
• to move forward

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RBE Risk-Based Estimating Process

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Top 10 RBE for ROI Tips

• Use a consistent, repeatable estimating process.
• Use multiple, independent estimates.
• Reconcile, dont compromise.
• Consider all risk factors Technical, business,
  organizational, external, project management.
• Weight and prioritize risks using probability,
  impact, and timing.
• Dont pad Quantify and justify your estimates.
• Revisit risks and estimates early and often.
• Get real! Is it a SWAG or a definitive estimate?
• Be accountable Estimate and spend like it is
  your money.
• Communicate Communicate Communicate Keep
  your stakeholders informed. Sell it!
• Follow-up to make sure that when your project
  ends, the benefits continue! Thats Reality On
  Investment.

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QA

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