Applying the Learning Curve Theory to a Project

Time and cost estimates are important to project management for the following reasons:

• Estimates are key inputs to project planning and control.
• Estimates support good decisions.
• Estimates are used to determine project duration and cost.
• Estimates are used to develop time-phased budgets and establish the project baseline.
• Without estimates you have inaccuracies, which result in time and cost under/overruns.

Most project tasks are unique and require the project manager to estimate duration/cost for each and every task separately; however, projects may also have repetitive tasks completed by the human resources assigned to the project. To estimate the labor hours/cost for these tasks the project manager may use an estimating technique that relies on learning curve theory to estimate the time and/or cost for completing repetitive tasks.

In this assignment, you will:

Task #1. Define and thoroughly discuss the Learning Curve Theory and how it applies to project management.

Task #2. Explain how you would apply the principles of the Learning Curve Theory to a real project in which you are familiar (as a project manager, team member, or one that you have read about in current events).

Task #3. Complete the following exercise on learning curves (see Page 2 of this assignment).

EXERCISE: Using the concept of Learning Curves for Estimating consider the following scenario and respond to each question (all work should be shown in your Word document):

Suppose that you are the estimator who is assigning costs to a major project to be undertaken this year by your firm, Acme Software Developers. One particular software development process involves many labor-hours, but the work is highly redundant. You anticipate a total of 100,000 labor-hours to complete the first iteration of the software development process and a learning curve rate of 80%. Assume you are going to use the cumulative average time in your calculations to determine the time it takes for each iteration. You are attempting to estimate the cost of the tenth iteration of this repetitive process.

Based on this information and a \$60 per hour labor rate, what would you expect to budget as

A.  The cost of the tenth iteration?

B.  The cost of the twentieth iteration?