"Plans are nothing. Planning is everything." Dwight D. Eisenhower. The Successive Principle gives the base for robust planning.

ROBUST ESTIMATIONS – INCREASE EBIT

Many people will have carried out some kind of estimate of costs or time consumption in the past and in many cases discovered that the results did not match reality and in the worst cases, the results were completely misleading.

There are many examples where budgets have failed, e.g. in major public sector construction projects – except in Norway!

How do you ensure you get a robust budget?

A new method has been developed – The Successive Principle. It is a particularly effective method, where using simple three-point estimation (minimum, most likely and maximum), you estimate the uncertainty within the project’s surroundings and respectively in the project’s deliverables.

There is evidence showing that the method works – several major projects have used the method, optimised projects, shortened execution times and reached completion very close to the estimated budget.

Norwegian AF Gruppen is a major contracting and industrial group, and following the introduction of The Successive Principle, the group increased its EBIT from 2.5% to 5.8% and at the same time doubled its turnover. Extremely thought-provoking results!

The Norwegian government has made the method statutory and today about 80% of major public sector projects in Norway are completed on time and on budget, whereas previously this figure was only 10–20%.

This should make the board of every company that carries out complex projects sit up and take notice!!

Shown below are some examples of the methods and tools that ensure robust budgets and plans, and thus help a company in its efforts to increase EBIT.

Robust and efficient methods

  • Successive estimation of the business case.
  • Successive estimation of project costs.
  • Involvement of key stakeholders who contribute to the project.
  • Visual workshop with identification of project deliverables (Work Breakdown System – WBS).
  • Visual project planning with posters, cards and participants who stand up.
  • Workshops with a facilitator, ensuring time is spent efficiently, and people don’t get sidetracked.

Applications

  • Estimation of project budgets.
  • Estimation and risk assessments of business cases.
  • Estimation of schedules, if required combined with Monte Carlo simulation.
  • Estimation of acquisition of a company, purchase of a private house, purchase of a holiday home.
  • Estimation of investment in a wind turbine, wind farm, solar plant, solar park, etc.

BENEFITS

Use The Successive Principle and gain valuable benefits:

  • Include uncertainties in the project’s surroundings and gain a clear and robust budget – increase the company’s EBIT.
  • Use three-point estimation and get opportunities and risk included in the estimates – and focus only on the Top 10 risk elements and save time.
  • Convene a wide-ranging analysis group and get significantly more opportunities and risks – and get credible estimates.
  • Thus, ensure that you have a strong case when you face the steering group, the PMO office, the project owner and above all, the finance department.
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Successive Principle – Best in the World

The Successive Principle provides effective estimation of uncertainties in the surroundings and the project’s tasks. Via a simple iterative technique, robust estimates are made, e.g. of the project budget or of the amount of a material at the construction site.

The project participants first estimate the influence from the surroundings, e.g. requirements management, project management. The participants then estimate the work packages that the project must deliver.

Often 80–90% uncertainty lies in the project’s surroundings, i.e. not within the project! It is very thought-provoking, knowing that many people only estimate what they know, i.e. project tasks, materials, investments, etc. – but often fail to include estimates of the uncertainty in the surroundings!

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Try The Successive Principle: Change A Tyre On Your Car.

This exercise is included in project estimation training. Project: ‘Change A Tyre On Your Car’ gets the participants to start to use the method. It is a type of project that most people know. However, the participants’ first guess at how long it will take will vary quite a bit.

The participants estimate to what degree the surroundings can affect the project. For example, the weather, their mood and experience. Consider for instance, if it is now the third time you have had to change a tyre in a week, it’s dark and the neighbour’s dog has just bit you. This affects the time that the project requires.

The surroundings: For example, the weather, your mental and physical condition, and your experience.

The tasks: Prepare the tools, change the tyre and tidy up. Things are then separated and subsequently, the group can see where the greatest uncertainties come from.

Opgaverne: Forberede Værktøj, Skifte hjul og Rydde op. Herefter er tingene adskilt og efterfølgende kan gruppen se, hvor de største usikkerhedsbidrag kommer fra.

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Three-point estimation: Learn the math

Here you can see the simple calculation principles that are used in the ‘engine’ of the Successive Principle.

Try it today and make some simple three-point estimations. This is only to illustrate the basic matemathics in the method. You can use the excel above to make a full estimation of e.g. your project, budget proposal, purchasing of a new greenhouse, a confirmation party, etc. Obtain robust budgets!

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