Major Utility Company Improves Estimation Process, Identifies $5 Million in IT Budget Savings
ChallengesThe IT department of a major electric utility company was chronically bad at estimating. Because of this, the business side of the company often had little confidence in their cost and schedule predictions. The company needed a more robust and predictable estimation process to support their IT budgeting.
SolutionThe company hired QSM to run a software estimation pilot that included three phases: Estimation Process Assessment, Historical Data Collection and Mentoring Support; Productivity Analysis; and IT Budget Estimation Support. QSM consultants began by assessing the IT group's current data collection and estimation processes and made recommendations for improvement across the group. They created SLIM-Estimate® templates customized to the group's lifecycle and historical data and provided sizing best practices. QSM consultants then leveraged a validated collection of the company's completed projects to perform a productivity assessment, providing them with a Five Star Report comparing their projects' performance with similar organizations and project types. QSM identified unique factors that were positively or negatively impacting productivity and quality in the company's development projects, including such variables as: application complexity, personnel skills, development methods, and customer influence. The final phase was IT Budget Estimation Support which gave the company a risk assessment of a portfolio of projects. This was based on independent parametric estimates using SLIM® early in the life cycle that considered several alternatives for meeting stakeholder requirements and constraints. This helped the company decide whether to approve initial funding (or continued funding) for each of the projects. For selected high-visibility projects, the company also received detailed project estimates to serve as the basis for future project planning.
OutcomesQSM consultants ultimately identified $2.5M in probable cost overruns from unrealistic plans. They also saw an opportunity to save $5M across the portfolio with revised plans that optimize the balance between cost, schedule and quality constraints. Their approach helped improve resource planning and budgeting as well as ensure vendors do not overly pad their cost estimates beyond a reasonable management reserve to cover risk contingency. The client now has a more robust and predictable method for estimating, tracking and benchmarking software projects in its IT portfolio, which includes both internal projects and those outsourced to external vendors. This new capability enables the customer to analyze software product size, speed of delivery, cost efficiency and quality for both historical and planned software projects to make more informed decisions with regards to strategic planning, IT budgeting, life cycle management, and vendor management.