1. Module 6: Project Time and Cost Estimating
We would like to acknowledge the support of the Project Management Institute and the International Institute for Learning, Inc. for permitting the use of their intellectual property in this curriculum.

2. Module 6 Objectives By the end of this module, you will be able to:
Employ the 5 steps of schedule planning.
Identify and use the following scheduling tools:
Network Diagrams
Critical Path Diagrams
Gantt Charts
Explain the connection between resource estimating, schedule estimating and cost estimating;
Move from a Gantt chart to a budget.

3. Importance of Accurate Estimating
These two images underscore the importance of accurate estimating.
Graph One illustrates how the cost in money, resources and staffing to manage change becomes increasingly high as you progress through the Project Cycle.
Graph Two illustratees the importance of reducing your margin or error as you “elaborate” your estimates over time.
Estimates that are most important to planning include Scope estimates, Time estimates (duration), Resource estimates and Cost estimates.

4. Schedule Planning Within client satisfaction Scope Time Cost Quality
Delivering projects on time is one of the biggest challenges faced in Project Management
Schedule issues are the main reason for conflicts on projects, especially during the second half of projects
Time has the least amount of flexibility in a project; it stops for no one…
Within client satisfaction
Schedule planning determines the time duration required to complete the project.
It clarifies the relationships that exist among the various work packages, and it helps project managers manage the time side of the triple constraint.
In an actual project, the order of planning schedules, costs, and resources may vary depending on the nature and constraints of the project.

5. 5 steps in Schedule Planning
Activity Definition – Use the Work Breakdown Structure to identify all the activities required to complete the project.
Step 2
Activity Sequencing - Develop a good project network diagram
Step 3
Activity Resource Estimating (in coordination with budgeting process)
Step 4
Duration Estimating – Assign durations to individual tasks and use Critical Path Analysis to identify the total project duration
Step 5
Schedule Development – Develop a Gantt chart based on outputs of steps 1-4
There are many scheduling tools and techniques available to the project manager.
Three of the most commonly used scheduling tools are network diagrams, critical path diagrams, and Gantt charts. These tools help the project manager progress through the 5 steps of Schedule Planning.

6. Activity Definition
Step 1
Use the Work Breakdown Structure to identify all the activities required to complete the project.
River Delta Wat/San Project
Reduced volume of fecal waste discharged in river
Fecal Level Monitoring System
Public awareness campaign
Latrine Construction
Initiative
Pre-Construction Activities
Obtain Ministry Plan Approval
Design engineering specifications
Conduct ground Water Study
Homeowner Preparations
Procurement
Reduced volume of household refuse directly dumped in river
Etc.
Activity definition involves reviewing the detailed WBS and its supporting explanations to understand all the work to be done so you can develop realistic estimation of the activities required.

7. Activity Sequencing
Step 2
Develop a good project network diagram
Involves reviewing activities and determining dependencies
Mandatory dependencies: inherent in the nature of the work; hard logic
Discretionary dependencies: defined by the project team; soft logic
External dependencies: involve relationships between project and non-project activities
You must determine dependencies in order to use critical path analysis (more to come on this in step 4.)

8. Project Network Diagrams
Project network diagrams are the preferred technique for showing activity sequencing
A project network diagram is a schematic or graphic display of the logical relationships among, or sequencing of, project activities
Activity on Arrow
Activities are shown on the arrows
Nodes link the arrows
Activity on Node
Activities are represented by boxes
Arrows show relationships between activities

9. Activity on Node or Precedence Diagramming Method
Activity Sequencing
Activity on Arrow
Activity on Node or Precedence Diagramming Method
Gantt Chart

10. Network Diagramming
Start A C B F D E
Finish
Find all of the activities that begin at a node. Draw its finish nodes and draw arrows between node and those finish nodes. Put the activity letter or name and duration estimate on the associated arrow
Continuing drawing the network diagram, working from left to right. Look for bursts and merges. Bursts occur when a single node is followed by two or more activities. A merge occurs when two or more nodes precede a single node
Continue drawing the project network diagram until all activities are included on the diagram that have dependencies
As a rule of thumb, all arrowheads should face toward the right, and no arrows should cross on a network diagram
Network diagramming is primarily a project management tool to be used in managing the performance and sequencing of the work contained in the WBS work packages.
One reason that the WBS is broken down to the work package level is to permit the use of its work packages as activities in the network schedule for the project.
The network schedule integrates this information by showing how relationships between activities affect their sequencing and determine specific activity performance dates for the project.
These schedules are typically not shown to upper management because they are better suited for use as working tools than as briefing aids.

11. Transforming a WBS into a Network Diagram
Start with the work package level of the WBS
Work packages are the basis for the network activities
Duration of each activity determined through the estimating process
Predecessors and successors must be identified for each activity
To create a network diagram for a project, you start with the work package level of the WBS. The work packages will become the network activities. The higher levels of the WBS are not scheduled because they comprise the work packages and the work packages were determined to be the WBS level at which work could be assigned and monitored most effectively.
Two points should be noted about determining logical relationships. When predecessors are identified for each activity, they should only be immediate predecessors. In other words, when you have a schedule sequence of activity A, which is followed by activity B, which is followed by activity C, which is followed by activity D, you should identify activity D’s predecessor as activity C, not as activities A, B, and C. That would only create two unnecessary and redundant logical relationships.
Nevertheless, it is also important to understand that multiple predecessors or successors for a given activity are possible and often exist. An example of that would be where activities A, B, and C all can be performed concurrently, the three activities have no logical relation to each other, and all three must be performed before activity D. In that case activity D would have three predecessors, activities A, B, and C.
Determining logical relationships means identifying predecessor activities (that is, activities that must be performed before the activity in question) and successor activities (or those activities that must be performed after the activity in question). Obviously, determining predecessors will determine successors and vice versa, because stating that activity A is a predecessor to activity B is the same as saying activity B is a successor to activity A.

12. Activity Resource Estimating
Step 3
Decision concerning resource estimating are informed by your project constraints.
Constraints
Budget
Project Duration
Work Requirements (activity list)
Resource Availability
Activity Resource Requirements
Once the sequence of activities is charted, it is tempting to move straight to activity duration estimating. BEWARE!
The duration of the activity is determined through the estimating process. It will depend on factors such as the nature of the activity and the RESOURCES AVAILABLE. For example, suppose a project manager is organizing extension agents for a public awareness campaign. Each extension agent may reduce the activity duration, but at some point there will be diminished returns because there may be a lack of qualified extension agents or overcrowding in the work area. The work schedule (hours per day and days per week) will also be a factor in determining the overall activity duration.
Different projects can have different constraints.
Project constraints will determine your choices regarding resources.

13. Common Estimating Techniques
Top-Down Estimation
Management defines the time to complete an activity
Based on judgment and experience
Useful in repetitive projects
Can be dangerous in projects new to the organization
Bottom Up Estimation
People doing the work are consulted for time estimates
People closest to work are apt to have a more accurate idea of actual effort required

14. Example: Bottom-up Estimation
Microfinance in Benin
When developing a project implementation plan for a microfinance project in Benin, Catholic Relief Services and its partners were discussing a project activity in which individual staff members transferred money to village groups.
CRS learned from partners that it was imperative for staff to travel in teams to ensure their safety. This had implications for the resource requirements and subsequently the budget that of the eventual plan.
In Benin
During detailed implementation planning for a microfinance project in Benin, CRS and its partners were discussing a project activity in which individual staff members transferred money to village groups. CRS learned from partners that it was imperative for staff to travel in teams to ensure their safety. This had implications for the transport budget that were addressed in the DIP.

15. Caution!
Adding resources doesn’t always reduce duration; too many resources can be difficult to coordinate and duration can actually increase
Resources working on multiple tasks simultaneously are usually less efficient than resources working on multiple tasks sequentially
Your project is dynamic and the context will change. Expect that will be errors in your estimation of out-year resource needs.

16. Activity Duration Estimating
Step 4
Assigning durations to individual tasks
Using Critical Path Analysis to identify the total project duration
After defining activities and determining their sequence and identifying resources, the next step is duration estimating
Duration includes the actual amount of time worked on an activity plus elapsed time
Effort is the number of workdays or work hours required to complete a task. Effort does not equal duration.
People doing the work should help create estimates.

17. Assign Duration to the Network Diagram

18. Transforming a WBS into a Network Diagram
Start with the work package level of the WBS
Work packages are the basis for the network activities
Duration of each activity determined through the estimating process
Predecessors and successors must be identified for each activity
Instruct participants to turn to the Activities tab in their binders and do Activity 3-4: Develop talking points and questions to use in guiding the stakeholder from this general statement to a functional-oriented requirement statement.

19. Critical Path
The series of tasks that must finish on time in order for the entire project to finish on schedule.
Path with zero float/slack time
The critical path is not the path with all the critical activities.
If one or more activities on the critical path takes longer than planned, the whole project schedule will be behind schedule unless action is taken to prevent a slip.
The critical path is the longest uninterrupted chain of activities through a project or a network diagram. It therefore determines the duration of a project and shows tasks that must happen on time in order to prevent overall completion of the project from being delayed. Mathematically speaking, it can be called the chain of activities with zero float time.
The most important reason for identifying the project’s critical path through the use of network diagramming is to allow the project manager to manage by exception. By identifying those work packages that must finish on time for the project to finish on time, the critical path also identifies the packages that deserve special attention from the project manager to ensure that they are kept on schedule. It also identifies work packages with very little float. This is just as important because with very little slippage they can also become critical.
Another key reason for the project manager to understand the project’s critical path is to improve decisions about resource allocations. Knowing where to put your most dependable people may go a long way toward overcoming the potential delays to project completion that are most likely to occur.
However, overemphasis on the critical path can be as much a mistake as ignoring it altogether. If the work that has float is ignored for too long, the float in those chains of activities will gradually be used up and they will become critical too. Obviously, the more chains of critical and near-critical activities there are, the more likely it is that the project will not finish on time. In addition, the critical path only addresses the issue of work packages critical to finishing the project on time. Many packages not on the critical path are critical in terms of budget issues, external partner issues, scope management, and so on. The project manager must not think that only critical path packages are critical to the project outcome or that all non-critical path work packages are not.

20. Critical Path Method
Critical Path Method (CPM) is a project network analysis technique used to predict total project duration
A critical path for a project is the series of activities that determines the earliest time by which the project can be completed
The critical path is the longest path through the network diagram and has the least (or no) slack or float
The critical path is not the path with all the critical activities.
If one or more activities on the critical path takes longer than planned, the whole project schedule will be behind schedule unless action is taken to prevent a slip.

21. Critical Path Example 1
Look at this project network diagram and assume all times are in days.
a. How many paths are on this network diagram?
b. How long is each path?
c. Which is the critical path?
d. What is the shortest amount of time needed to complete this project?
First develop a good project network diagram
Add the durations for all activities on each path through the project network diagram
The longest path is the critical path

22. Critical Path Example 2

23. Schedule Development
Schedule development uses results of the other time management processes to determine the start and end date of the project and its activities
The goal is to create a realistic project schedule that provides a basis for monitoring project progress for the duration of the project
For the purpose of this training we will focus on one principle tool - Gantt charts.

24. Gantt Charts
Gantt charts provide a standard format for displaying project schedule information by listing project activities and their corresponding start and finish dates in a calendar format
Symbols include:
milestones or significant events on a project with zero duration
Thick black bars: summary tasks
Lighter horizontal bars: tasks
Arrows: dependencies between tasks
There are many ways to display information from project schedules. The graphic and tabular displays used in applying the various network diagramming techniques provide several approaches. In addition, there are other methods that are easier to understand, especially for those who are not experts in network diagramming methods. These include Gantt charts and project milestone listings. Although they won’t show all the logical relationships and other information characteristic of network diagrams, both of these simpler displays can be generated from an underlying network analysis.
Gantt charts plot project activities or groups of activities as horizontal bars across a time-scale. They show activity start dates (the left end of the each bar), finish dates (the right end of each bar), and durations. They were first created by Henry L. Gantt in 1917 and are often referred to as “bar charts” based on their format. With a network diagram, you can determine float and critical path. On a Gantt chart, you merely display when you want to do the various activities. The Gantt chart is one of the most familiar charts to many managers and is thus useful for high-level reporting and decisions.
There are some common conventions in the use of Gantt charts. Clear or open bars may represent planned work, where as closed or shaded bars represent completed work. A vertical line may be used to show the update date for displayed data. Activities reflecting progress to the left of the line would be behind schedule. Activities reflecting progress to the right of the line would be ahead of schedule.

25. Illustrative Gantt Chart
Milestones are significant events on a project that normally have no duration

26. From Schedule to Budget
Having addressed schedule planning, the project manager must turn to a second major planning process and deal with project cost. Although it may initially be approached from a very high-level view, good cost planning should eventually address cost issues at the work package level. This means planning all costs associated with completing the individual work packages, as well as costs for overhead, contingency reserves, and other indirect expenditures.
What sort of information should you consider in planning project costs?
The PMBOK Guide lists the following inputs to cost estimating:
The WBS, Resource requirements (the types and amounts of resources needed for each work package), Resource rates (staff cost per hour, material cost per cubic year, etc), Activity duration estimates, Estimating publications, Historical information (from files, people, commercial sources), Charts of accounts, Risks (that may have an impact on costs)
Who can the project manager consult with in an effort to obtain cost information? There are a variety of sources. They include outside estimators, those who perform the work, those with experience working on similar projects, those who know the risks of the project in question, and those who are responsible for the work.

27. Estimating Terms Elapsed Time:
The time needed spanning days or weeks to complete (aka: calendar time or flow time)
Must be considered when determining the length of time to complete the project
Work Effort is the actual amount of work time to complete an activity - expressed in hours or days
Early Start: is the soonest time possible to begin an activity or series of activities.
Late Start is the latest time possible to begin an activity or series of activities without impacting the overall project completion date.
Critical Path Analysis is a tool to help you evaluate schedule trade-offs
Free slack or free float is the amount of time an activity can be delayed without delaying the early start of any immediately following activities
Total slack or total float is the amount of time an activity may be delayed from its early start without delaying the planned project finish date
A forward pass through the network diagram determines the early start and finish dates
A backward pass determines the late start and finish dates