The following content is based on the whitepaper, “Bigger Than a Breadbox: 10 Tips for Better Project Estimates, Part 1,” written by Jerry Manas.
Accurate project estimates are a key success factor for individual projects. That’s a given. Yet, little is written on the trickle-down effects of poor estimates—surprising, as poor estimates are a leading cause of issues such as project delays, continuous crisis mode operation, resources being shifted around haphazardly, and many more. Really, it’s just a simple matter of cause and effect: bad estimates = project delays = shifting resource demands = a domino effect that impacts the entire portfolio. You’ll soon find yourself drowning in chaos, a state that is, unfortunately, not uncommon for many of today’s organizations.
Move away from crisis mode to operate more proactively.
This is the only way to be consistently successful—I know, no pressure, right? Well, actually estimation skills are extremely learn-able; they’re something you can quickly improve upon. More often than not, it’s the process that organizations rely on that is flawed, not individual task estimates. All you need are the right tools, consideration, and process guidelines, which are listed out for you below.
Get ready for the positive ripple effect.
With 10 simple tips, you can be on your way to improving your project estimates. Let’s get started with the first three in this seven-part series:
- When we get there, we’ll know (Accuracy versus timing)
You’ve just begun a project. You have plans and schedules but, really, little is known. The vast list of unknowns makes it difficult to predict anything with pinpoint precision—yet, you still must present an estimate. For this reason, project estimates are required at various points in a project’s lifecycle, from initial conception to budget approval to baseline acceptance. Of course, as more is known about the projects, the greater the likelihood of a reliable estimate—with a few exceptions where evolving requirements are the norm, such as with Agile projects. I’ll discuss these exceptions in the following tips.
- There’s more than one way to manage uncertainty (Traditional agile approaches)
“One common mistake is making firm commitments too early in the project when little is known, hence the need for multiple tiers of estimates with narrowing degrees of accuracy.” – Jerry Manas [block quote]
Agile approach moves testing sooner in the project cycle by developing partial software or products in short 2-4 week increments and getting early customer feedback—this eliminates the more intense requirements and documentation up front, thus rendering traditional estimate methods obsolete. However, to make Agile work, there’s a certain level of trust needed that the development team consists of smart and client-focused individuals who will work closely with the customer to deliver iterations of completed product that speak to the market’s prioritized needs. As a result, successive iterations become more and more accurate, but this method obviously isn’t for everyone, or even every project. It wouldn’t be appropriate for projects where customer involvement isn’t feasible or desired or for projects where exact accuracy is needed up front. There are other options, such as capital planning.
- Be careful what you ask for (Estimates and capital planning)
Ah, the classic three-tiered estimation approach. This seems to make the most sense for fairly large, traditional projects, as it involves progressively accurate estimates at the Order-of-Magnitude, Budget, and Baseline levels. However, these same types of projects often have a level of capital planning involved, which requires approvals early and often, when little is known about true costs. It’s best to be as accurate as possible when trying to get approval for capital spending. Minimize risk by:
- Providing the scope, project benefits, and a high-level project timeline;
- Providing evidence that alternate solutions were analyzed and offer rationale for chosen solution;
- Outlining specific risks and the potential capital budget impacts,
- Specifying further analysis that may be required later that may or may not impact the capital budget; and
- Ensuring the accuracy range of the budget request is specified.
No matter how you look at it, project estimates can be tricky. Change happens, whether expected or unexpected, and you must be able to adjust resources, budgets, and deadlines. If you start out with a bad estimate, you’ll be making the process that much more difficult, ultimately impacting the entire portfolio. Rather than suffer through the unnecessary turmoil, use these tips to guide your project estimate process and avoid having to shift into crisis mode altogether.
To continue learning about tips for better project estimates, read up on the next installments of this blog series, listed below:
- Part 2: Improving Project Estimates is all About Direction
- Part 3: Project Estimation Methods
- Part 4: It’s Time to Start Planning for Resources
- Part 5: How Risk Management is Crucial to Project Management
- Part 6: 6 Reasons Why Projects are Late
- Part 7: 10 Point Checklist for Better Project Estimates