Estimating Fixed-Price Projects

Martin Fowler has a great post about fixed-price projects. They, at ThoughtWorks, just doubled original estimate (so half a million becomes one million). It reminds me Estimation Games (exceptional Rob Thomsett’s article). He calls this game “Doubling and add some”.

I was taught this game in 1968 by Bob Smyth who, in those days, was the
smartest person I had ever met. Simply, you figure out [however you can] what
you think the task will take and then double it. So a 5 day task is quoted as a
10 day task.
Like all good games, I learnt the lesson of why you play when I
submitted my first ever estimate to my big boss and he immediately halved it.
Later, I realised there was a better version of this game. I quadrupled my
initial estimate so then, when my boss halved it I still had double [which
surprisingly I always needed]. Bob also showed me that by adding some float or
fudge factor usually around 20 – 40 % if I was halved, I still had some slack up
my sleeve [which surprisingly I also always needed].
Of course, the problem with this game is that everyone knows it why novice players are often caught out by bosses/clients who cut the estimate given by a novice by 3/4 when the novice has only doubled their bid. The other problem is that it never stops. In a version of bluffing as seen in poker, no one knows who has doubled or who have
multiplied by eight and so on.
Much later, when I was researching material for project management, I found that time and motion studies in the 1950’s had shown that the average lost time [meetings, waiting, talking and so on] in office work was around 50%. So the doubling game was based on some sound research.

Read the article and you’ll understand all defects of fixed-price projects estimation.

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