According to a study done by IBM, only 40% of projects meet schedule, budget and quality goals. That’s certainly not a statistic to be proud of in any way. This begs the question: What are we doing wrong? One stance takes a look back at where the project began and what was estimated with regards to project cost & effort in the first place. Were the estimations way off base? Could more have been done to get to a more accurate projection?
We’ve found that in most instances, not enough emphasis is placed on getting your cost & time estimates right. They mostly end up being a bit of a thumbsuck, using some past experience and a few known factors here and there, but mostly guesses with relatively low confidence levels. The end result is overruns, something that seems to have become an accepted, common project occurrence when it really shouldn’t be.
Here are our top tips for taking the guess work out of your estimations:
- Understand the basic steps of the estimation process
Everything starts with a clear understanding of the project scope. Once the scope has been defined, you need to break it down into the exact steps and tasks needed to accomplish it. We’ve found that a work breakdown structure is a great tool for this. Now that you have all the detailed tasks, you can start sizing. After sizing you need to get those sizings reviewed by experts and peers, and only after everyone agrees that the estimates are comprehensive enough, you can finalise them and create your baseline.
- Don’t just stick to one estimation technique
There are various different techniques that can be used for effort & cost estimations. Top-down estimation, bottom-up estimation, expert judgement, Parkinson’s Law, algorithmic cost modeling, and the list goes on. They’re all worth looking into to see what suits your project needs most, but remember that you don’t just need to pick one. We’ve found that mixing a couple of different techniques can actually yield more accurate results. Using a 2nd (or 3rd) technique is also a great way to sanity check the results of the 1st.
- Build in some contingency
The level of uncertainly and risk will dictate how much contingency you need to build in to ensure you don’t tumble into the dark world of overruns. But contingency isn’t just about adding extra hours and funds because you can. You should be able to back it up with real concerns, otherwise people will end up assuming that you’ve just built in unnecessary fat and then push you to bring down your estimates anyway.
- Clearly communicate all assumptions & your overall confidence level
Not all estimations are clean-cut and sometimes certain assumptions have to be made. Understandably, the more assumptions you have, the lower your confidence level is likely to be. Be sure to play open cards about all of the assumptions you’ve made and what confidence level you can realistically apply to your estimates. This way, if things do overrun, you’ve at least prepped your stakeholders for potential issues as more details come to light.
Need someone who can assist with your project cost & effort estimations? Our team of experienced consultants can assist with these while filling key roles to ensure that everything stays on track until your project goes live. Give us a call on 021 447 5696 or email firstname.lastname@example.org to discuss your specific requirements.