Transforming project forecasts using probabilities

Plagued by watermelon projects? You know the kind... the ones that are green, green, green, until the very end and then they are red. Well, you're not the only one. The good news is that changing the way you forecast can provide a higher level of clarity on just how likely it is that a project will finish by a given date.

By attending this talk you'll learn 1) why probabilities are a necessity when uncertainty is present, 2) how to use your team's data to create probabilistic forecasts, and 3) what to keep in mind to create the most accurate forecasts.

Transcript

1. @everydaykanban | @55degreesAB 1
   

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2. @everydaykanban | @55degreesAB
   Follow us on social media
   /company/55degrees
   @55degreesAB
   @55degreesAB
   /55degreesAB
   /c/ActionableAgileAnalytics
   Apps that make it easier
   to get work done
   🎉
   From re
   fi
   ning work, to bringing external data into Jira, to
   improving work
   fl
   ows and creating reliable forecasts, 55
   Degrees has apps to make your work less stressful.
   

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3. #PM72
   3
   @everydaykanban | @55degreesAB
   Benjamin Franklin
   
   
   November 1789
   “…IN THIS WORLD,
   NOTHING IS CERTAIN
   EXCEPT DEATH AND
   TAXES.”
   

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4. Often forecasts are
   interpreted as
   certainties
   
   
   because we don’t tell
   them otherwise
   4 #PM72
   @everydaykanban | @55degreesAB
   CC BY-SA 3.0, https://en.wikipedia.org/w/index.php?curid=3422341
   

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5. 5 #PM72
   @everydaykanban | @55degreesAB
   The 3 Gaps
   Outcomes
   Plans
   Actions
   

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6. 5 #PM72
   @everydaykanban | @55degreesAB
   The 3 Gaps
   Outcomes
   Plans
   Actions
   !
   Knowledge Gap
   Difference between what we
   would like to know and what we
   actually know
   

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7. 5 #PM72
   @everydaykanban | @55degreesAB
   The 3 Gaps
   Outcomes
   Plans
   Actions
   !
   Knowledge Gap
   Difference between what we
   would like to know and what we
   actually know
   !
   Alignment Gap
   Difference between what we want people
   to do and what they actually do
   

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8. 5 #PM72
   @everydaykanban | @55degreesAB
   The 3 Gaps
   Outcomes
   Plans
   Actions
   !
   Effects Gap
   Difference between what we
   expect our actions to achieve
   and what they actually achieve
   !
   Knowledge Gap
   Difference between what we
   would like to know and what we
   actually know
   !
   Alignment Gap
   Difference between what we want people
   to do and what they actually do
   

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9. 6 #PM72
   @everydaykanban | @55degreesAB
   Used with permission from Jim Benson
   A predictable
   response
   

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10. 7 #PM72
    @everydaykanban | @55degreesAB
    EE4: Building an SSV
    Timeline
    Total expected hours
    Total hours
    Sam Jansen
    Expected hours
    Total hours
    Alexander Meynen
    Expected hours
    Total hours
    Tinus Michiels
    Expected hours
    Total hours
    Jeroen van Aert
    Expected hours
    Total hours
    Jef Van Den Bergh
    Expected hours
    Total hours
    Bob Verschueren
    Expected hours
    Total hours
    1 2 3 4 5 6 7 8 9 10 11 12 13 14
    Tasks Subtasks wk h h h h h h h h h h h h h h
    Engineering
    a. Case SSV 1 i. Motor/ Solar panel analysis 7 4 3
    ii. Gear ratio 15 2,5 2,5 10 2,5 2,5 2,5 2,5
    iii. Choice of materials 10 5 1 1 1 1 1 5 1
    iv. Frame design 30 15 2 1 1 1 15 1 1
    v. Optimalisation (bisection method) 25 4 15 10 4
    vi. Sankey diagram 10 12 10
    vii. Production parts 20 10 12 10
    viii. Construction 60 10 10 10 10 10 10
    b. Case Simulink i. Simulation solar panel 24 4 4 4 4 5 4 4 10
    ii. Simulation DC-motor 7 4 3
    iii. Simulation race 6 1 1 1 1 1 1
    c. Case SSV 2 i. Slope run test 24 4 4 4 4 4 4
    ii. Simulation drive shaft 7 3 4
    iii. Technical drawings 40 10 30
    iv. Collision analysis 15 10 5
    d. Race day 30 5 5 5 5 5 5
    Enterprising
    e. Wikipage i. Company information 3 3 1
    ii. SSV information 5 5 1
    f. Name & Logo i. Design 2 1 2
    ii. Engraving 6 3 3
    g. Documents i. Plan of approach 4 2 2 2 2
    ii. Work breakdown structure 4 2 2 2 2
    iii. Gantt chart 10 1 5 3 5 3
    iv. Cooperation contract 2 2 2
    v. Case 1 document 45 5 5 15 5 5 15 5 5 15 5
    vi. Simulink document 15 5 10 5 10
    vii. Case 2 document 40 15 5 10 10
    h. Wikipage i. Upload documents 5 5 1
    ii. Blog 5 5 2 2
    iii. Design description 6 3 3
    iv. Final process report 5
    i. Evaluation i. Test 1 30 5,00 5 5 5 5 5
    ii. Test 2 30 5,00 5 5 5 5 5
    iii. Peer assessments 1
    total 548 0 92 27 92 25 92 21 88 22 91 25 90 25
    Legende milestone
    responsibillity
    Gantt chart 1
    Educating
    Weeks
    The workplace version of ruling it harder…
    CC BY-SA 3.0 - https://upload.wikimedia.org/wikipedia/commons/thumb/b/bf/AM4_Gantt.pdf
    

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11. Deterministic Forecast
    8 #PM72
    @everydaykanban | @55degreesAB
    IT WILL BE
    
    
    DONE ON
    
    
    X DATE
    

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12. Deterministic Forecast
    8 #PM72
    @everydaykanban | @55degreesAB
    IT WILL BE
    
    
    DONE ON
    
    
    X DATE
    •Communicates a single
    possible outcome
    

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13. Deterministic Forecast
    8 #PM72
    @everydaykanban | @55degreesAB
    IT WILL BE
    
    
    DONE ON
    
    
    X DATE
    •Communicates a single
    possible outcome
    •Provides no probability of
    that outcome
    

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14. Deterministic Forecast
    8 #PM72
    @everydaykanban | @55degreesAB
    IT WILL BE
    
    
    DONE ON
    
    
    X DATE
    •Communicates a single
    possible outcome
    •Provides no probability of
    that outcome
    •Appropriate only when
    certainty is assured
    

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15. Probabilistic Forecast
    9 #PM72
    @everydaykanban | @55degreesAB
    THERE’S AN
    
    
    85% CHANCE
    
    
    IT WILL BE DONE
    
    
    ON OR BEFORE
    

    X DATE
    

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16. Probabilistic Forecast
    9 #PM72
    @everydaykanban | @55degreesAB
    THERE’S AN
    
    
    85% CHANCE
    
    
    IT WILL BE DONE
    
    
    ON OR BEFORE
    

    X DATE
    •Two components:
    
    
    ‣ Range of outcomes
    
    
    ‣ Probability you’ll fall into
    that range
    

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17. Probabilistic Forecast
    9 #PM72
    @everydaykanban | @55degreesAB
    THERE’S AN
    
    
    85% CHANCE
    
    
    IT WILL BE DONE
    
    
    ON OR BEFORE
    

    X DATE
    •Two components:
    
    
    ‣ Range of outcomes
    
    
    ‣ Probability you’ll fall into
    that range
    •Appropriate whenever
    uncertainty is present
    

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18. 10
    Let’s create these probabilistic forecasts…
    #PM72
    @everydaykanban | @55degreesAB
    Single Item Forecasts
    Multiple Item Forecasts
    

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19. 10
    Let’s create these probabilistic forecasts…
    #PM72
    @everydaykanban | @55degreesAB
    Single Item Forecasts
    Multiple Item Forecasts
    📆
    
    
    Fixed Date
    📑
    
    
    Fixed Scope
    2 Types
    

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20. For each, we can use the
    same simple data to
    calculate the probabilities
    11 #PM72
    @everydaykanban | @55degreesAB
    

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21. Single Item Forecasts
    12 #PM72
    @everydaykanban | @55degreesAB
    How long will it take?
    

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22. Single Item Forecasts
    12 #PM72
    @everydaykanban | @55degreesAB
    How long will it take?
    Finish
    Start
    

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23. Single Item Forecasts
    12 #PM72
    @everydaykanban | @55degreesAB
    How long will it take?
    Finish
    Start
    Cycle Time: The total elapsed time it takes a work item
    to travel from start to
    fi
    nish
    

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24. #PM72
    13
    @everydaykanban | @55degreesAB
    Cycle Time: The total elapsed time it takes a work item
    to travel from start to
    fi
    nish
    Single Item Forecasts
    (Finish date - start date) + 1
    

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25. #PM72
    13
    @everydaykanban | @55degreesAB
    Finish
    Start
    Cycle Time: The total elapsed time it takes a work item
    to travel from start to
    fi
    nish
    Single Item Forecasts
    (Finish date - start date) + 1
    

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26. Use a Cycle Time Scatterplot to
    calculate probabilities
    14 #PM72
    @everydaykanban | @55degreesAB
    

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27. Use a Cycle Time Scatterplot to
    calculate probabilities
    14 #PM72
    @everydaykanban | @55degreesAB
    50% of work took
    
    
    7 days or less
    

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28. 85% of work took
    16 days or less
    Use a Cycle Time Scatterplot to
    calculate probabilities
    14 #PM72
    @everydaykanban | @55degreesAB
    50% of work took
    
    
    7 days or less
    

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29. 15 #PM72
    @everydaykanban | @55degreesAB
    by understanding your risk tolerance
    Choose a probability
    

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30. 15 #PM72
    @everydaykanban | @55degreesAB
    Wrong as much
    as right…
    by understanding your risk tolerance
    Choose a probability
    

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31. 15 #PM72
    @everydaykanban | @55degreesAB
    Wrong as much
    as right…
    Ask: What is the fallout if we fall
    outside of the probability?
    by understanding your risk tolerance
    Choose a probability
    

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32. 15 #PM72
    @everydaykanban | @55degreesAB
    Wrong as much
    as right…
    Contains too
    many outliers
    Ask: What is the fallout if we fall
    outside of the probability?
    by understanding your risk tolerance
    Choose a probability
    

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33. 15 #PM72
    @everydaykanban | @55degreesAB
    Wrong as much
    as right…
    Contains too
    many outliers
    Just the right
    balance?
    Ask: What is the fallout if we fall
    outside of the probability?
    by understanding your risk tolerance
    Choose a probability
    

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34. 16 #PM72
    @everydaykanban | @55degreesAB
    probabilistically
    Deliver your forecast
    

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35. 16 #PM72
    @everydaykanban | @55degreesAB
    85% of the time we finish a
    

    work item in 16 days or less
    

    (from the day it starts)
    probabilistically
    Deliver your forecast
    

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36. 17 #PM72
    @everydaykanban | @55degreesAB
    The underlying rule of thumb
    

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37. Multiple Item Forecasts
    18 #PM72
    @everydaykanban | @55degreesAB
    When will
    they all be
    done?
    

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38. Multiple Item Forecasts
    18 #PM72
    @everydaykanban | @55degreesAB
    Finish
    Start
    When will
    they all be
    done?
    

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39. Multiple Item Forecasts
    18 #PM72
    @everydaykanban | @55degreesAB
    Finish
    Start
    Throughput: The total count of items that pass the
    de
    fi
    ned
    fi
    nish point in a given unit of time
    When will
    they all be
    done?
    

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40. 19 #PM72
    @everydaykanban | @55degreesAB
    A Throughput Run Chart will show you the data
    But you need a Monte Carlo Simulation
    to calculate the probabilities
    

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41. 20 #PM72
    @everydaykanban | @55degreesAB
    For Fixed Scope, use Monte Carlo: When
    

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42. 20 #PM72
    @everydaykanban | @55degreesAB
    For Fixed Scope, use Monte Carlo: When
    There’s an 85% chance that
    we will
    f
    inish these 45 items on
    or before May 25
    

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43. 21 #PM72
    @everydaykanban | @55degreesAB
    For Fixed Date, use Monte Carlo: How Many
    

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44. 21 #PM72
    @everydaykanban | @55degreesAB
    For Fixed Date, use Monte Carlo: How Many
    There’s an 85% chance
    that we can
    f
    inish
    
    
    67 or more items by then
    

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45. 22 #PM72
    @everydaykanban | @55degreesAB
    For an entire portfolio, use Portfolio Forecaster!
    

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46. 23
    @everydaykanban | @55degreesAB
    Summary
    

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47. 23
    @everydaykanban | @55degreesAB
    • When more than one outcome is possible,
    probabilistic forecasts are necessary.
    Summary
    

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48. 23
    @everydaykanban | @55degreesAB
    • When more than one outcome is possible,
    probabilistic forecasts are necessary.
    • Probabilistic forecasts show risk in 2 ways:
    

    a probability (%) and a range.
    Summary
    

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49. 23
    @everydaykanban | @55degreesAB
    • When more than one outcome is possible,
    probabilistic forecasts are necessary.
    • Probabilistic forecasts show risk in 2 ways:
    

    a probability (%) and a range.
    • Choose a % that matches your risk tolerance
    Summary
    

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50. 23
    @everydaykanban | @55degreesAB
    • When more than one outcome is possible,
    probabilistic forecasts are necessary.
    • Probabilistic forecasts show risk in 2 ways:
    

    a probability (%) and a range.
    • Choose a % that matches your risk tolerance
    • Tools like ActionableAgile and Portfolio Forecaster
    exist to help you create these forecasts in minutes.
    Summary
    

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51. 24 #PM72
    @everydaykanban | @55degreesAB
    Join us at the after party
    
    
    for demos of ActionableAgile,
    Portfolio Forecaster, and more
    Tuesday, June 14
    
    
    19-21 CEST
    Register on the PM72 website!
    

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52. @everydaykanban | @55degreesAB
    🍦
    Follow us on social media
    /company/55degrees
    @55degreesAB
    @55degreesAB
    /55degreesAB
    /c/ActionableAgileAnalytics
    Get your free trial of any
    app shown below via the
    Atlassian Marketplace!
    

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