What is the level of effort (LOE) in project management?

Understand the level of effort in project management

What is the meaning of level of effort?

"Level of effort" (LOE) is a project management term used to estimate the amount of work required to complete a task or project. It is usually expressed in units such as hours, days or weeks. LOE is different from "duration," which refers to the actual amount of time needed to complete a task. For example, a task may last a week, but the level of effort required may only be a few hours of work spread over that week.

Different levels of effort in project management

Low level of effort

A low-effort task is one that requires relatively little effort and low resource allocation. For example, scheduling a team meeting, making a phone call, or sending an email may be low LOE activities. These types of tasks can take anywhere from a few minutes to several hours to complete. Low LOE activities require minimal effort from assigned resources.

Average level of effort

Medium LOE tasks are more complex and require moderate effort and resources. Writing a report, analyzing requirements documents, or performing system testing can be medium LOE activities. These types of tasks can take from a few hours to a few days to complete. Work requires focused effort by assigning work employees.

High level of effort

A high LOE activity is one that requires a lot of effort and resources to complete. Developing a new software feature, planning a detailed project, or conducting extensive research are examples of high-effort activities. These tasks can take weeks or even months to complete and involve a significant amount of work from multiple resources.

How to determine the level of effort required for an activity?

Estimating the level of effort for an activity is part art and part science. Here are some tips on how to determine LOE:

• Leverage historical data - Use effort estimates from similar past activities as a starting point.
• Break down activities - Break down high-level activities into smaller tasks for better effort estimation.
• Consider the skills needed - Activities that require specialized skills may require more effort.
• Account for dependencies - Dependent activities can affect the effort required to complete the work.
• Estimate duration - The amount of time an activity will take will provide clues about the level of effort.
• Use three-point estimates - Provide best-case, most-likely, and worst-case estimates to get a range for the LOE.
• Evaluate complexity - Greater complexity often equates to more effort.
• Risk assessment - Tasks with high uncertainty or risk require contingency effort.
• Get team input - Ask project resources for input on the estimated level of effort.
• Refine estimates if needed - Re-estimate LOE when more is understood after work begins.

Continuously perfecting your ability to estimate effort levels takes practice and experience with different types of projects.

When should a fixed price effort-based contract be used?

Firm fixed price (FFP) effort is a type of contract used in project management in which payment is based on hours worked rather than the delivery of specific work products. FFP LOE contracts are best suited for projects where there is uncertainty about the level of effort required.

Some main situations when applying FFP LOE contracts:

• Early stages of R&D projects where the required effort is unclear
• Support and maintenance projects require a constant level of effort
• Projects requiring specialized expertise are billed by the hour
• Projects have activities that arise rather than being fully defined in advance

The benefit of FFP LOE contracts is that they provide greater flexibility in developing projects, project scope can be adjusted through change orders based on the required LOE. However, the downside is that the government has to bear more risks due to uncontrolled costs. It is necessary to carefully monitor the number of hours spent.

Real-life example of how much effort goes into project management

Here are some examples of how to apply level-of-effort estimation in real-life project scenarios:

Software Development - When planning a software project using Agile methodology , the level of effort for User Stories within a sprint will be estimated in relative units such as sentence points. story. Story points represent the complexity and effort required to complete the User story. Stories are then assigned based on the team's velocity or capacity.

Research Project - For a research project, the principal investigator can estimate the LOE needed for the various experimental procedures to be tested. Simple data collection or literature review may require less effort, while clinical trials or complex data analysis have a higher LOE. Resources can then be planned accordingly.

Construction Projects - In building construction, the estimator evaluates the effort required for different types of work such as excavation, foundations, framing, electrical, etc. Activities that require more equipment or materials have Higher LOE. Understanding the level of effort allows setting the right workforce, tools, and schedules.

Consulting services - Project consulting by effort spent instead of products created. Consultants estimate LOE for various activities such as collection, analysis, testing, documentation, training, etc. Accurate LOE estimates allow consultants to determine project pricing and staffing needs.