note-2

In Software Project Estimation: Fantasies I said that a budget, estimate or even a plan was not a price.  After the publication of that essay I had a follow up conversation with a close friend. He said that in his organization the word estimate is considered a commitment, or at the very least a target that all his project managers had to pursue. YEOW! He is playing fast and loose with the language and therefore is sending a mixed message.

A commitment is a promise to deliver.  An example of a commitment I heard recently as I was walking through the airport listening to the cell phone conversation of a gentlemen walking next to me was “I promise not leave the sales review until the end of the month.”  A commitment indicates a dedication to an activity or cause.  The person on the cell phone promised to meet the goal he had agreed upon.

What is a target? In an IT department a target is a statement of business objective. An example of a target might be “credit card file maintenance must be updated by January 1st to meet the new federal regulation.” A target defines the objective and defines success.  A target is generally a bar set at a performance level and then pursued.  Another example is “I have a target to review six books for the Software Process and Measurement podcast in 2014.”  Note six is two more than we did in 2013 and represents a stretch goal that hopefully will motivate me to read and review more books.

Simply put, a commitment represents a promise that will be honored and a target is a goal that will be pursued.  An estimate is a prediction based on imperfect information in an uncertain environment.  An estimate, as we have noted before, is best when given as a range. Stating an estimate as a single number and adding the words “we will deliver the project for X (where X is a budget or estimate) converts the estimate into a commitment that must be honored.  Consider for a second . . . if a project is estimated to be $10M – $11M USD and a team finds a way to deliver it for $7M USD, would you expect them to find a way to spend the extra money rather than giving it back so the organization can do something else with the money? Bringing the project in for $3 or $4M less than the estimate would mean they had not met their target or commitment. Turning an estimate into a commitment or target can lead teams toward poor behaviors.  Targets are goals, commitments are a promise to perform and an estimate is a prediction.  Targets, commitments and estimates are three different words with three different definitions that generate three different behaviors.