Difference between effort and lead-time

If we ask developers to estimate a given task in days, they usually come up with estimates of lead-time (=calendar time). If we ask them to estimate a task in hours, they come up (or quickly can learn to come up) with estimates in effort (=the net time to do the work). Conventional Project Managers know that developers are optimistic, and have their private multiplier (like 2, √2, e or π) to adjust the estimates given. Because these figures then have to be entered in project planning tools, like MS Project, they enter the adjusted figures as lead-time. The problem with lead-time figures is that these are a mix of two different time-components:

• Effort, the net time needed to do the work
• Lead-time, the time until the work is done (gross time to do the work)

The difference (Lead-time minus Effort) is the time needed for all other things people have to do for the project as well, like: drinking coffee, meetings, going to the lavatory, discussions, helping colleagues, telephone calls, e-mail, dreaming, etc. In practice we can use the Effort/Lead-time ratio, which is usually in the range of 50-70% for full-time team members.

Because the parameters causing variation in these two components are different, they have to be kept apart, and treated differently. If we keep planning only in lead-time, we will never be able to learn from the tracking of our planned, estimated figures. Thus we will never learn to predict development time. If these elements are kept separately, people can learn very quickly to adjust their effort estimating intuition. Typical values found: first week: 40% of the committed work done, second week: 80% done, from the third week on: 100% or more done. Now we can start predicting!

Separately, people can learn time management to control their Effort/Lead-time ratio. Brooks indicated this already in 1975 [1]: Programming projects took about twice the expected time. Research showed that half of the time was used for activities other than the project.

In actual projects, we currently use the rule that people select 2/3 of a cycle (26 or 27 hours for a full week) for project tasks, and keep 1/3 for other activities. Some managers complain that if we give about 3 days of work and 5 days to do the work, people tend to "Fill the time available". This is called Parkinson’s Law [2]: "Work expands so as to fill the time available for its completion".
Management uses the same reasoning, giving people 6 days of work and 5 days to do it, hoping to enhance productivity. Because even managers cannot do 6 days of effort in 5 days, and people have to, and will do the other things anyway, people will always fail to succeed in accomplishing the impossible. What is worse: this causes a constant sense of failure, causing frustration and demotivation.
If, however, they take the amount of work they can accomplish, they will succeed. This creates a sensation of accomplishment and success, which is very motivating. The observed result is that giving them 3 days work for 5 days is more productive that giving them 6 days of work for 5 days.