Project Estimation (1of 3)

October 26, 2010

One of the areas that has always amazed me with respect to Alliance Partners and their system integration efforts is their ability to estimate and ultimately bid the project cost. It seems almost an art (perhaps a black art) as it is a science, but it is critical to the success of the business.

Project Requirements

It starts with gathering good requirements which is an art in and of itself. In a previous post, we discussed a ‘needs-based’ approach and the type of requirements that you want to gather. We also talked about probing techniques and how to deal with conerns.

Task Breakdown

Once you have a good set of project requirements, you still face the challenge of estimating the cost of the project. Hopefully, you have a good idea of the hardware requirements, but labor usually makes up the bulk of the total cost. Ideally, you can break down the project into a set of tasks to develop a system that meets the requirements. Then for each task you can estimate the effort, duration, and cost.

There are several methods for estimating the labor cost of each task:

  1. SWAG (Not recommended) – Scientific Wild Ass Guess
  2. Expert – ask an expert based on their experience
  3. Delphi – Ask a group to brainstorm and build consensus
  4. Comparative – Based on history or similar task
  5. Weighted average – a combination of estimates (e.g. Optimistic + 4*Likely + Pessimistic) / 6)

Obviously, depending on the size of the project, you’ll need to decide how much time you want to invest in this process. But, estimating project costs is critical to your profitability.

Labor Cost Variables

Other factors to consider in estimating projects.

  • Work interruption factor – no one can work uninterrupted. For instance, meetings. Such breaks in the thought process and work effort will inevitably impact effectiveness. Idea: consider limiting meetings and e-mails to certain parts of the day.
  • Part-time effect – Working on multiple projects can impact effectiveness. The developer must ramp up or down from one project to the next.
  • Skill factor – Obviously, a novice may take longer to complete a task than an expert.
By completing the task breakdown and considering the variables, you can reasonable estimate of the labor cost which often constitute the majority of the cost of the project. Next week, we’ll formulate that into a price and ultimately the proposal.

How To Ensure Project Success

January 13, 2010

Last week, I referenced this article, written by Vance VanDoren, of Control Engineering about how to avoid project failure. In addition to discussing the most common reasons for failure, he provided a list of ways to succeed:

  1. Define project goals;
  2. Develop project scope and schedule;
  3. Establish multi-discipline project team;
  4. Define the mechanical process;
  5. Develop functional process controls descriptions;
  6. Develop network configuration drawings; and
  7. Develop equipment and programming specifications.

First Things First

I have to agree that lack of good/solid project requirements is probably the #1 challenge to project success. This can result from the customer not having a clear understanding of the project, the integrators failure to perform adequate requirements, or simply the sense of urgency to get the product started (without sufficient requirements.

Get the Customers to Help You Help Them

As I said last week, you may want to reference Vance’s article with your customers as a way to educate them about common project pitfalls. By better educating them, you can increase their understanding and desire to help you ensure the success of the project.


Sales Tactics – Requirements Gathering (cont.)

May 20, 2009

Probing for requirements

Requirements gathering is largely dependent on your probing techniques. So, it is worth your while to educate yourself (and your sales team). For instance:

  • Open probes – used to understand concepts. What do you need? What about this is important to you? How will this make a difference?  Tell me more.
  • Closed probes – closed to elicit and clarify specific information. So, the requirement is …. If I understand you correctly, you’re saying … Right?

Keep in mind that during the requirements phase, the customer should do most of the talking (70%). Using  these type of questions, you should be able to follow the basic 3 step requirements technique:

  1. Elicit and define the need
  2. Analyze and support a suitable solution
  3. Verify and close that the need will be met

Note that it is not essential to come up with the exact solution to the need. You merely need to establish what the requirement is and how you will judge if the requirement is met.

Dealing with Concerns

concernsAnother aspect of successful requirements gathering is recognizing concerns and knowing how to deal with them effectively. In each case, you should first acknowledge the concern and probe further for clarification before responding. Then, check again for acceptance before closing.

Skepticism – occurs when a customer expresses doubt about a proposed solution to a requirement. Respond by offering further proof.

Misunderstanding – occurs when a customer is misinformed about your proposed solution. Respond by clarify the proposed solution and seek acceptance.

Indifference – occurs when the customer understands the solution but does not see that it is necessary. Respond by validating the need before repositioning the solution.

Drawback – occurs when the customer not only understands the solution but is not satisfied. Respond by acknowledge their dissatisfaction and their unsolved need. Then depending on the situation, you may need to refocus the customer on a great need that is being resolved, thereby minimizing the issue.


Sales Tactics – Requirements Gathering

May 18, 2009

At National Instruments, we teach a ‘needs satisfaction’ approach to selling where:

  • Selling – A process of uncovering, understanding, and satisfying customer needs.
  • Need – A customer want or desire that can be satisfied by your product or service

 So, selling is the process of revealing AND understanding customer wants, desires, and needs; then satisfying those needs with the features and benefits of your organization, products, or services.  Often, system integrators refer to this as requirements gathering. And, it’s arguably the single most important aspect to successful, profitable projects.

Establishing scope

Gathering requirements begins with understanding the scope or the ‘big picture’ for the project. Not only what really needs to be accomplished, but how will the project be viewed as successful? Just as important, you must ascertain the stakeholders who will ultimately be judging the success of the project. And, distinguish between the elements that are critical versus nice-to-have, or non-essential.

100_3106Until you understand the big picture, there is not much sense diving into the details. For instance, my wife and I like to take vacations, but would often end up frustrated until we understood our different ‘scope’ for our project. For me, a vacation is about doing stuff. For my wife, it is about not doing stuff. Once that became clear, we were able to establish requirements that fill both our needs.

Types of Requirements

During your sales engagement, you should have a checklist to ensure that you have gathered requirements for all aspects of the project. In addition to the basic capabilities and performance of the system, how will the customer interact with the system? What interfaces and data/results be required? Other requirements might include safety, reliability, security, and so on.

Ideally, for each requirement, you should assign specific attributes. Most importantly, how will you measure/assess the requirement and the acceptance criterion? Some folks also assess uniqueness, criticality, and relative priority of each requirement. And, some even establish the feasibility and risk of each requirement as well as record the source of the requirement in case there is trouble meeting it.


Selling is Key to Your Success

May 13, 2009

If you’ve been in the NI Alliance Partner business for long, you realize that technical know-how is great, but selling is key to your success. From beginning a sales engagement and gathering requirements through proposing, negotiating, and closing the sale, there are many things that can prevent you from ever applying that great technical knowledge.

First Contact

Selling begins with that first customer contact after the lead is generated. Actually, some argue that selling is part of the marketing process itself. But, marketing, well that’s topic in and of itself. So, let’s assume that the lead has already been generated.

  • Preparation – what is required for the proper opening? Gather all known and available information about the prospects. Based on the source of the lead, what do we know about the potential customer (e.g. needs, care-abouts)? What was the value proposition that he has already encountered? Also, has there been any prior contact, maybe they are already a customer. Of course, the amount of preparation should be proportional to the anticipated size of the opportunity.
  • Opening – Always have down pat how you are going to introduce yourself and your company. Often, this is akin to your positioning statement. That should be followed quickly by the purpose of the meeting or call.
  • Expectations – Then, set the expectations for what you want to accomplish. Agree to the agenda and how much time that both parties have. In addition to ensuring that you understand the purpose and agenda, this will allow you to take control and set the tone for the meeting.

The old adage applies; there is only one chance to make a first impression. Don’t miss your opportunity to make it a good one.