11.2 Comments on Uncertainty in the Triad Estimate

The information available to create the business rules estimate was pretty fuzzy. Should we fudge the business rules number upward to be conservative in our estimate? For estimation purposes, the answer is no. The focus of the estimate should be on accuracy, not conservatism. Once you move the estimate's focus away from accuracy, bias can creep in from many different sources and the value of the estimate will be reduced. The best estimation response to uncertainty is not to bias the estimate but to be sure that the estimate accurately expresses any underlying uncertainty. If you were completely confident in the business rules number, you might consider the effort estimate to be accurate to ±10%. Considering the uncertainty in the business rules, perhaps you would fudge the uncertainty number to something like +25%, -10%.

A better way to address the uncertainty arising from the business rules part of the estimate could be to carry a range for the business rules factor through your computations rather than using a single number. You might estimate the factor with a 50% variation (in other words, a range of 0.75 to 2.25) instead of using a single point factor of 1.5. That would produce an effort range of 38 to 49 staff months rather than the single-point estimate of 44 staff months.

One contrast between the estimate created using this approach and the estimate created using a rolled-up (undecomposed) approach is that, in the rolled-up approach, uncertainty in one area can spread to other areas. If there is a 50% uncertainty in the business rules, the estimator might apply that uncertainty to the whole estimate, rather than just to the quarter of the estimate related to business rules. If you applied that same 50% variation to the whole estimate, the estimate would range from 22 to 66 staff months rather than from 38 to 49 staff months. Identifying what specifically is uncertain and how much effect that should have on the estimate helps narrow the overall estimation range.

Tip #54

Do not address estimation uncertainty by biasing the estimate. Address uncertainty by expressing the estimate in uncertain terms.

Estimation Uncertainty, Plans, and Commitments

Ultimately, the impact of uncertainty in the estimate will flow through to the project plans and commitments. Because the focus of plans and commitments is on maximizing performance rather than on accuracy, it is appropriate to adjust your commitments in a conservative direction, based on uncertainty in the underlying estimate.