Our reader asked for clarification on an exercise as she was using it to write her business plan and estimate pricing. In case you too are stumped, here's Lou's answer:
"Your question is referring to the Project Management for Trainers book, Exercise 3.4 which reviews an estimating process built by Bell Labs in the early 1970s.
Let me break one down for you – notice how I carry the answer of each step forward to the next step:
I’ll be the person doing the work and I’m writing a one hour module using PPT for a customer on customer service.
Step 1: Let’s say Base Work Effort (how long it would take an average person without interruptions) = 100 hours
Step 2: This is the only one with TWO parts that are cumulative. Skill Level: I’m going to rate myself a (between .75 – 4.0) .75 because I do a lot of this work so it should take me LESS time than the average person. The math is 100 hours X .75 = 75 hours Experience Level: I’d rate myself (between .50 – 1.5) 1.0 because I also know a bit about the business but not everything (middle range). The math is 7 X 1.0 = 75 hours.
Step 3: Project related – how much project management will I need to do? (between 10 – 20%). This is an ‘add’ not a multiply like Step 2. I’m going to say 10% because it’s such a small project.
The math is 75 hours + 10%(75) =82.5 hours
Step 4: Environmental (how much interruption is there so I can’t get my project work done): (Between 25% - 35% is the original study but that was 40 years ago). Again, this is an ‘add’. In today’s world, I’d say this is a HUGE number, thanks to email, technology and multitasking. Most of my students say they can work on their projects 20% of the time in a day! I’ll be VERY generous and say 50% because 35% is unrealistic (it means I can work on my projects 65% of the time.
The math now is 82.5 + (82.5 X 50%)= 123.75 hours
So my original estimate of 100 hours became 123.75 hours on the clock. Likely still too low :)
Billable HOURS (base work effort) and how long it will take on the clock (the 123.75 hours) have to be kept separate in your mind."
This will help if you already have the PM for Trainers book, but we recommend Lou's newer book, Managing Projects as a better resource for how projects work in today’s business context.