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Optimism bias is the demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters. It must be accounted for explicitly in all appraisals, and can arise in relation to:
To minimize the level of optimism bias in appraisal, best practice suggests that the following actions should be taken:
For large or complex projects:
A common problem I have in a corporate environment is to accurately portray an estimate. We are estimating time and cost for software projects. The key issue is that software development estimates are highly inaccurate in the early stages, with errors of 200-400% quite common and a high degree of positive skew is evident. Overruns are more common than under runs and extreme overruns are alarmingly common.
The main problem is to express the uncertainty as clearly as the expectation, without appearing too elaborate.
In the past, we might say "There is a 90% chance that it will take 1-2 years and cost 5-15 million dollars". This magically turns into "You said it would take 1 year and cost $5m!".
We are dealing here with people who have zero statistical sophistication. There is a confounding factor that people want low numbers so their project gets approved over others.
I have some ideas:
1. Plot time or cost by probability.
2. Plot time by cost as a probability density cloud.
3. Express estimates like this (wide range, round numbers)
"
More than $3m
Less than $30m
"
Tim
P.S. I feel someone will suggest "Do better estimates then you won't have a problem". The fact is, until you have dug into the technical uncertainties and have defined requirements in detail you are subject to major technical risk and scope screep risk. You also have a serious problem of framing - the number the customer first thought of is likely to be way under the mark.
-- Tim Josling (email), May 15, 2003Using Evidence-Based Scheduling is pretty easy: it will take you a day or two at the beginning of every iteration to produce detailed estimates, and it’ll take a few seconds every day to record when you start working on a new task on a timesheet. The benefits, though, are huge: realistic schedules.
Realistic schedules are the key to creating good software. It forces you to do the best features first and allows you to make the right decisions about what to build. Which makes your product better, your boss happier, delights your customers, and—best of all—lets you go home at five o’clock.
Wiki was invented to help with Extreme Programming, and can be very helpful in various phases of agile development process. For those not familar with the buzzwords, Agile is a family of development methods with shorter, more iterative cycles than traditional "big bang" development.
Wiki can be useful in a range of XP and agile development practices, including:
Wiki also helpful in facets of development not tied directly to XP
The best practices of AMDD are: