Project Management Institute

7 Tips for estimating your projects

VOICES | In the Trenches

Take the subjectivity and speculation out of estimating.

By Christian Bisson, PMP

Estimating can be a tedious task, and the final numbers are influenced by a daunting number of factors: scope, type of project, resources involved in estimating, type of client, unknown variables, potential risks and more. But estimating is critical to your project’s—and your organization’s—success. These tips can help practitioners arrive at an estimate that’s both useful and accurate.

1. Always include contingency

A contingency is something that’s expected to be spent. Therefore, project managers shouldn’t remove it from an estimate simply to make the project look less expensive. In addition to a monetary contingency, also include the time and resources needed to handle the work the contingency implies.

If the contingency is not needed, the project will simply be done earlier and the organization can keep the funds for another time.

2. Avoid making numbers fit the budget

When working on an estimate, a project manager might be tempted to pressure the team to keep the numbers optimistically low. But this creates an estimate that is only good on paper; when the time comes to justify an overage, the team members will simply reveal that they were asked to estimate low numbers and overage should be expected. If the budget and scope are at odds, practitioners should instead adjust the scope: Ask the team to provide what can be done within the budget.

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3. Communicate team assumptions

A common mistake when estimating is listing tasks and numbers while not specifying assumptions behind the numbers. For example, team members may say they can create an online form in seven hours, but they’re envisioning a form with 10-12 fields, while you are expecting 20 fields. Employ good requirements management by making sure team members provide clear details on what they’re estimating to avoid costly surprises later in the project.

4. Avoid using only high-level breakdowns

The more detailed the breakdown, the more accurate the estimate and the easier it is to get the whole team on the same page. For example, it’s too high-level to say: We will create an online store with a shopping cart. It’s clearer to state: We are responsible for the login, account creation, account management interface, shopping cart and confirmation emails.

Clearer estimates may reveal higher costs, but it’s better to find that out while you can still control scope or expectations, rather than mid-project when you are reporting an overage.

5. Double-check for commonly overlooked activities

In the strain to consider every task, deliverable and bit of scope, it can be easy to overlook ancillary activities, such as meetings, edits on internal or client feedback and bug fixing. But these often-overlooked activities happen frequently during a project—and can frequently derail estimating efforts. Though these tasks can have a huge impact on your estimate, it’s difficult to gauge how long certain parts of the project will take. Feedback, for example, can range from “Change these two sentences” to “I don’t like the concept, can you propose something else?” To handle this ambiguity, look at historical documents like past project reports and assess a percentage of the work rather than a specific amount of money or time.

6. Include the accuracy of the estimate

Estimates are all guesses based on assumptions, but some guesses are more accurate than others. If the project involves using new technology, for example, then your estimate will be less accurate than if you’re using a system the team already knows. In addition, many estimates are done too quickly due to time constraints; in those cases, the accuracy of estimates drastically diminishes.

It’s crucial to communicate the accuracy of the estimate, meaning to specify by how much the amount given can vary. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) provides the following guidelines:

  1. Rough Order of Magnitude Estimate: -25 percent to +75 percent
  2. Budget Estimate: -10 percent to +25 percent
  3. Definitive Estimate: -5 percent to +10 percent

By communicating this information to your client, you set expectations and avoid surprising anyone when the estimate changes.

7. Don’t forget risks

This part may be tricky depending on how aware of risk management your team is. Often, the team will do a quick assessment, agree that it’s a risky project and add more hours to the estimate.

However, that’s not enough. Planning for your risk budget means using the registered risk and mitigation plans and accounting for the time needed to make those plans happen. For example, to prevent a technological constraint in a future phase of the project, you may plan to build a prototype. It would potentially avoid 200 hours of rework and would confirm the look and feel the team can obtain before the organization commits to the client. However, the prototype will still take 70 hours to build, and that effort needs to be taken into consideration when estimating the project. PM

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Christian Bisson, PMP, is a project manager at Twist Image, Montreal, Canada. He blogs at 90percent.ca.

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.

PM NETWORK FEBRUARY 2015 WWW.PMI.ORG
FEBRUARY 2015 PM NETWORK

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