Join Bob McGannon for an in-depth discussion in this video Establishing an estimating structure, part of Project Management Foundations: Budgets.
I wish I could tell you that all of my project estimates were accurate. They haven't been. And yours probably won't be either. As much as that sounds pessimistic, I share that because it's reality. Before all of us project managers end up going into a corner and sulking, take heart. Let me share something else with you. It's okay to be wrong. Really, it's okay. You have to produce estimates to move things forward. The idea, however, is to be wrong for as short a period of time as is possible.
And that's where establishing an estimating structure comes in. If you remember earlier, I talked about the three types of estimations, as well as the different tools and techniques you can use to produce them. However, in the real world, you don't have to use a fixed structure. The estimation stages and techniques are tools to apply within the context of each project. They should be customized. So, here are a few tips to create your estimating structure for your particular project.
First, start with any standard approaches typical to your industry. Parametric estimates are very commonly used in industries such as construction. Start there. They provide great reference data points. If you're building a road, start with the cost per lane, per mile. If you're building a house, use the cost per square foot. If you're designing computer code, you might use cost per module. Second, look for events or milestones in your project where you will have updated financial information.
For example, if you're updating your company's computer equipment, you should be able to refine your estimates as soon as you receive quotes for computers, tablets, or servers you will install throughout your company. You can plan to update your overall project cost estimates at that time. The idea is to make refinements to your estimates as you go through each milestone moment. Rather than being a negative because it's more work, think of it as a fantastic opportunity to hone your estimates. A chance to look at what you've done.
And really get your estimates right. This also involves reviewing cost or duration actuals once a task has been completed to see how you and your project staff did with your estimates. It's a great way to see how you're tracking and with this sort of estimating structure in place, you can also let management know that your forward projections are based on revised estimates. These will narrow as the project goes along. So, you'll continue to refine your estimates throughout the project life cycle.
After all, project management is as much about managing expectations as anything else. So, set expectations by clearly defining the scope of your project. Then back it up with accurate information. Which includes refining estimates as you obtain more information.
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- Discovering costing standards
- Examining capital and operating costs
- Assigning costs to resources
- Communicating your budget
- Recovering a bloated budget
- Addressing budgeting issues<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.