go parametric to reduce the "hectic"

Mickey Lesczynski, Specialist Leader, Deloitte Consulting LLP


Many organizations encounter challenges estimating the effort associated with projects, and many projects are often off-track before they even start. Once the estimate is completed, difficulties can arise when the estimate needs to be adjusted due to changes in scope, schedules, or resources. Deloitte has developed an approach to estimation that mitigates these issues, blending the art of estimation with the science of a structured, repeatable approach.

This paper discusses the approach taken by Deloitte to take the estimation model beyond just generating the initial estimate to also providing outputs, which support project staffing, work planning, and scope management. The topics include:

  • Why making the estimation process transparent is a good idea;
  • How to structure the estimation model to get increased accuracy from minimal inputs; and
  • Using your estimation model to enrich your project management capabilities and drive fact based conversations with project stakeholders.

The paper concludes with a summary of what our experiences have shown to be critical to the effective adoption of this estimation approach on proposals and projects.

Traditional Estimation Approaches

It is more common than most would care to admit, but traditional estimation approaches, tools, and techniques have inherent challenges and many projects are often off-track before they even start.

An estimate is frequently created by analyzing a similar project, and determining if your project is a little larger or smaller than a previous project. Based on resources and the schedule used to perform the previous project, plus the difference in “perceived size,” the resources and schedule are adjusted at a macro level to formulate a staffing plan that is used to determine the total effort and cost of a project. Once the estimate is developed and presented to stakeholders, the project estimate is frequently challenged, and in many cases, the estimate is reduced to align with a specific budgetary target. What is commonly overlooked, however, is the reconciliation of scope and assumptions to align with the updated budget, setting the project up for challenges once execution is underway.

This “black box” approach to estimation is based on a rough understanding of the scope and assumptions of the project compared to the scope and effort from a previous project. It is dependent on careful data, and sometimes the facts from the previous project may not be remembered adequately. Without a standardized, structured approach, historical data, and metrics to drive the estimate, there may be little correlation between effort and scope. Once project execution begins, it is common for the divide to grow and the basis for the original estimate can be/is usually lost.

Starting with the End in Mind—Happy Clients and Well Managed Projects

Before we dive into the details of Deloitte's estimation model, consider what we are trying to achieve—a transparent and correct estimation approach. This approach supports visibility into how decisions on scope affect project effort and costs. An estimate, that once finalized, can be used to actually manage the project—the same scope items defined in the estimate become the project deliverables. Imagine how much better off a project could be when you start with a structured estimation approach and a supporting tool with a set of levers based on historical project data.

Also imagine that the estimate is done collaboratively—the project team collaboratively working together with stakeholders to understand the scope and provide input into the “levers” that control the project's basis of estimate.

The “levers” controlling the estimated effort are discussed with stakeholders as decisions are made on the scope, schedule, and cost of the project. When estimated effort and the associate cost appears too high or too low, informed decisions can be made real time about the tradeoffs between the scope, schedule, and resources to keep the project within cost boundaries. These are some examples:

  • How are staff capabilities initially factored into the estimate?
  • What solutions have been implemented already that can be used to reduce the estimate?

The healthy debate that comes from these discussions serves to confirm the scope of the project and gain buy-in to the estimates. Everyone becomes more comfortable with the estimates, and the estimates are easier to explain since the relationship with scope is clear. The project is also easier to control because the “tough” decisions were made up front, and if refinements are needed the process can be repeated as necessary.

Happy clients are important to happy projects. This can be reality if you use a structured estimation approach based on defined scope; use a supporting tool that carries that scope forward to the work planning and scheduling of the project.

Estimation Defined

Estimation is defined as the process of developing an understanding of the project's effort and cost. Many estimation approach and techniques are available for a project to use including:

  • Analogous estimating
  • Parametric estimating
  • Bottom-up estimating

Analogous Estimating

Analogous cost estimating uses the values of parameters, such as scope, cost, budget, and duration or measures of scale such as size, weight, and complexity, from a previous, similar project as the basis for estimating the same parameter or measure for a current project. When estimating costs, this technique relies on the actual cost of previous, similar projects as the basis for estimating the cost of the current project. It is a gross value estimating approach, sometimes adjusted for known differences in project complexity (PMBOK® Guide Fourth Edition, Project Management Institute [PMI], 2008, p 171).

Parametric Estimating

Parametric estimating uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate for activity parameters, such as cost, budget, and duration. This technique can produce higher levels of accuracy depending upon the sophistication and underlying data built into the model. Parametric cost estimates can be applied to a total project or to segments of a project, in conjunction with other estimating methods (PMBOK® Guide Fourth Edition, Project Management Institute [PMI], 2008, p 172).

Bottom-Up Estimating

Bottom-up estimating is a method of estimating a component of work. The cost of individual work packages or activities is estimated with the greatest level of specified detail. The detailed cost is then summarized or “rolled up” to higher levels for subsequent reporting and tracking purposes. The cost and accuracy of bottom-up cost estimating is typically influenced by the size and complexity of the individual activity or work package (PMBOK® Guide Fourth Edition, Project Management Institute [PMI], 2008, p 172).

Why a Parametric Approach?

Although a combination of these approaches might be required when estimating a project, a parametric estimation approach strikes a balance between the analogous and bottom-up approaches and provides a reliable basis for an initial project estimate.

A parametric estimate is based on a method with a standard set of tasks, job roles, predefined task standard estimates, and a clearly defined metric for the task (the lever). A parametric estimate focuses on the tasks that carry 80 percent of the work and does not estimate every task that needs to be accomplished. Therefore, the rigor of a bottom- up estimation approach is lessened so estimates can be done more quickly to arrive at a total project effort and cost estimate.


A parametric estimation approach and a supporting tool can produce correct and overall estimates for effort, deliverables, and resources for a project. Exhibit 1 highlights some specific benefits to a parametric estimation approach.

Benefits of a Parametric Estimation Approach

Exhibit 1: Benefits of a Parametric Estimation Approach


No estimation approach is perfect. The information that comes out of the approach and tool is only as good as the historical data and the levers that are used to implement the tool. In addition, the estimation tool does not replace the team's knowledge and experience.

Deloitte's Estimation Model

Deloitte has honed estimation from an art to a science by creating standard models and tools that practitioners can use to create an estimate. Deloitte's proprietary estimation tool, called Project Estimator & Planning Suite (PE&PS), drives consistent estimation of effort, costs, and resources for the delivery of our technology transformation projects, with the goal of increasing quality of our services.

Our project estimating strength lies in not just what the PE&PS tool does, but the core concepts it is built upon.

Exhibit 2 highlights some core concepts upon which PE&PS was built.

Core Concepts

Exhibit 2: Core Concepts

Experiences over a 10 year period have tested the model, and project data is continually harvested and used to enhance and expand the approach and the tool.

Elements of the Estimate

Exhibit 3 highlights the inputs, core master data, and outputs of the PE&PS tools. Although this graphic shows the elements of how Deloitte's proprietary tool is built, the concepts can be applied to any organization.

Elements of the Estimate

Exhibit 3: Elements of the Estimate


A good estimate begins with method scope, how you will deliver the project work. Most technology organizations have standard methodologies for delivering projects—the same methodology used to deliver the work should also be used to estimate the effort. All projects should define the tasks (from the standard method) and associated work products that structure how the project will be delivered. The project team's selection of the phases to be performed and the tasks and associated work products in those phases defines the method scope.

Product scope is also required to understand what is expected to be delivered. Product scope includes the levers that characterize the project such as the number of business processes, applications, end users, geographies, and languages, to name a few.

Once the scope is defined, a schedule should be determined. Schedule is defined as the amount of time it will take to complete a project. This includes defining the releases and rollouts, as well as the weeks per phase and the start date of each phase.

As the schedule is defined, the hours for resources should also be confirmed. Can the project be delivered in the schedule defined based on the effort per phase and the ramp up and ramp down schedule of the resources?

The final step in creating the initial estimate is to understand the resources that will deliver the work. The size of the resource pool and the work the resources will perform is balanced against the scope and schedule

Parametric Master Data

The core of the estimation model is the experience from practitioners and past projects. The parametric master data defines the statistical relationship between historical data and other variables to calculate an estimate for activity parameters, such as effort, cost, and duration. A few of the elements are defined in the following:

  • Method—All projects should define the tasks and associated work products that structure how the project is expected to be delivered. Ideally this is based on the standard method used to deliver the project. A common work breakdown structure should be used and applied to all projects to continue to collect actuals to refine the estimates
  • Product Scope Metrics—The levers or metrics are the counts of the product scope that should be delivered. For example, the number and complexity of reports that should be developed as part of the project could be a factor that could define the amount of effort to develop associated work products (method scope), such as functional specifications, technical specifications, system test cases, etc.
  • Job Roles—A set of job roles assigned to a method task. Job roles are responsible for executing or performing the method task.
  • Task Estimates—The hours per job role to complete a task.
  • Formulas—Product scope metrics cannot be defined for every task in the method. Formulas are required to build a correlation between the method task and the product scope metrics that should be populated. For example, the number of system test cases estimated may be a formula based on the number of use cases, number of business processes in scope, etc.

Inputs are the heart of the estimate. The estimator defines method scope, product scope, schedule, and confirms the hours per resource per task. The tool applies formulas to generate effort per resource per task based on the inputs. Adjustments to the inputs are made until the scope, effort, schedule, and resources align with stakeholder expectations.


Inputing the information is the first step. However, interpreting the results and utilizing the outputs is also critical to the estimation process. The estimation model results in reports for the following:

  • Resource effort estimates will be produced by project/service release, phase, source (Deloitte & client), job roles, hours, and full-time employees (FTEs); and
  • Cost estimates will be produced by project/service release, phase, source (Deloitte & client), job roles, hours, FTEs.

The ablity to perform “what-if” analysis on alternative timelines, processes, and scope may be used to refine the estimate.

In addition to reports, the tool also has the ability to export initial staffing and work plans for the project.

Tying it Together

So you've got a solid estimate—how do you “keep it alive?” Since scope has been defined in terms of the phases in scope, the tasks to be performed, and the instances of deliverables to be produced, the next step is to transform the estimate into a starting project plan.

Develop the Work Plan

By developing a solid estimate that has transparency around scope and the levers and trade-offs, resulting in buy-in from stakeholders, the overall staffing models and the associated work plan can come to life.

Using the combination of method scope, product scope, schedule and resources, the team has enough information to generate the starting work plan directly from the estimation model. This is not the final plan, but a starting point for work plan scheduling that starts the team on the desired direction and clearly aligns with the scope used to define the estimate. The PE&PS tool generates a work plan automatically, but it could also be produced manually.

Exhibit 4 highlights the initial first-cut work plan by automatically exporting the estimate to a work plan.

Export of Estimate to Work Plan

Exhibit 4: Export of Estimate to Work Plan

Again, no tool may be perfect and it does not replace the knowledge and experience of the project team. Therefore, the work plan generated needs to be refined to:

  • Confirm the duration of tasks;
  • Confirm the dependences between tasks; and
  • Assign resources to the job roles.

The technique of bottom-up estimating will be required as the team schedules the work plan. Bottom-up estimating allows the team to team to factor in the skillsets, experiences, and team specific details that might not be captured in a parametric estimator.

The work plan continues to be refined until the individual resources are not over allocated to tasks during the period of execution. The result of this process is a work plan that can allow a project manager to assess that the available resources can perform the identified work per the planned schedule.

Manage the Work Plan

So, I know what you are thinking. “I now have a work plan – everything will go according to plan!” Not exactly. Projects that have achieved a scheduled work plan based on estimates with a clear understanding of the scope, schedule, and resources are still at risk if the plan is not managed on a weekly basis. Weekly processes need to be in place to make sure the work plan stays on track. The objectives of the weekly process include these:

  • Confirm that the team understands schedule expectations;
  • Gathering and recording the most current information on task progress;
  • Analyzing project performance; and
  • Replanning on an ongoing basis to meet project goals and objectives.

Exhibit 5 highlights the weekly work plan management processes that need to be in place for your organization.

Work Plan Management Activities

Exhibit 5: Work Plan Management Activities

Management of the work plan will continue to confirm that the project is on track.

Change Control

Once the work plan was baselined with the initial estimates, there should be very few questions about the level of staffing required to complete the project. However, scope, schedule, and resource issues should be addressed through an overall change control process. Any change to the plan—large or small—should go through the change control process so everyone understands what changes are required and the impact on scope, schedule, and resources.

Keeping the relationship alive between the initial estimates upon which the project scope was based and the inevitable changes as the project moves forward facilitates a continued understanding among stakeholders of the levers and trade-offs associated with scope and cost management. Discussions surrounding changes—and their impacts—should be based on facts rather than speculation. A structured approach to estimation and carrying the basis for estimates forward into the project support fact-based conversations and outcomes.

And a Last Word—Adoption

You can have the most significant estimation model in the world, but getting people to use it (and abandon their personal approaches) can be quite challenging. Adoption should be considered when introducing anything new to an organization, and estimation models are no exception.

Deloitte has significant investment in developing and providing leading methods and tools for projects. Deloitte's approach to promoting adoption of our methods and tools is through the definition of “standards”—essentially policies that our consulting engagements are required to adhere to as we provide work. By following the standards, we endeavor to improve the consistency and quality of the work we provide to our clients.

Our estimation standard requires pursuit and project teams use the model and tool, align project effort with the internal pricing model, and to re-estimate when significant changes are made to scope, assumptions, or schedule. The estimation standard is aligned with other related standards—such as those addressing project management, to help facilitate efficient application by our practitioners. The standards have been communicated and promoted through awareness sessions, workshops, and videos throughout the organization.

Be sure to consider how adoption can be achieved when introducing new approaches into your organization.


A structured, parametric approach to estimation that is directly tied to the methodology used to provide the project can provide a solid basis to develop the estimate, but also a vehicle to use as the basis of estimate to develop project staffing and work plans. Scope management can be more easily achieved when scope definition is clear from the start and the “tough” conversations around cost and scope trade-offs are held early. Transparency in the estimation approach and “levers” to control costs enables fact-based conversations with stakeholders and generates buy-in for the agreed upon scope.

The methodology drives the “inputs” to the estimate, and the “outputs” include a starting point for project staffing and work plans. Structuring both the estimate and the work plan using the delivery methodology supports the transition from project estimate to project execution.

Lastly, don't forget to consider adoption when introducing new approaches or tools to your organization. Development and deployment of underlying standards is one way to promote adoption.


Project Management Institute. (2008). A guide to the project management body of knowledge (PMBOK® Guide) (4th ed.). Newtown Square, PA: Project Management Institute.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

Copyright © 2012 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.



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