Discover the importance of good estimates and several ways to estimate project tasks.
- [Voiceover] Good estimates for work and costs are important because those estimates affect your project schedule and budget, and those in turn could determine whether it makes sense to run the project. If your estimates are low, a project might get approved when another project would deliver better results. In addition, low estimates make meeting expectations almost impossible. If you estimate too high, a worthwhile project might not be approved, or a project could take longer and cost more, because people tend to use the time and money you give them.
There are two things you estimate in projects, time and cost. You estimate time, because it affects both the project schedule, and cost. Second, you estimate costs that aren't time-based, like materials you need, or travel required. During initiation and planning, you work with a core planning team made up of people knowledgeable about the project. This planning team helps you develop your initial estimates. Later on, during project execution, you can obtain more accurate estimates from the people assigned to tasks.
They understand what has to be done, know how long it will take them based on their experience, and they're more motivated to live up to the estimates they've made. Estimates don't have to be perfect right off the bat. For project selection, an estimate that's plus or minus 75% might be good enough. As you learn more about the project during planning and execution, your estimates grow more accurate, ideally, plus or minus 10%.
There are several techniques you can use for estimating. When possible, base your estimates on similar projects that are already complete. If a project represents uncharted territory for your organization, consider bringing in experts who are familiar with the work, like consultants or vendors. With parametric models, you calculate work and cost based on some measure, such as the number of square feet for construction.
This technique works well when you have data from many similar projects. The program evaluation and review technique, abbreviated to PERT, uses the best, worst, and most likely results to estimate a project. It's a good approach if a project is unfamiliar or has a lot of uncertainty. Estimators think about what can go wrong or right with tasks, which helps produce better estimates. The Delphi technique counts on several heads being better than one.
First, you ask several experts to produce estimates independent of one another. You then share the results with the group, keeping the estimates anonymous. You keep the estimates anonymous because you don't want anyone to be influenced by the reputation or authority of a co-expert. You then ask each expert to estimate again, repeat this step a few more times, and then use the average of the last round as your final estimated value.
You can estimate from the top-down or the bottom-up. Top-down estimating is effective for large projects, or early rough estimates. You estimate phases or major components, and then break those estimates into smaller pieces until you get to individual tasks. Estimating from the bottom-up means you estimate each task and then add them up until you have the estimate for the entire project. For large or complex projects, add time for complexity, communication, interactions, travel, management, and so on.
There's no good rule of thumb for how much to add, so you have to base your increases on experience. On the other hand, watch out for people adding time to their estimates as a safety margin. The best way to prevent these issues is to set aside time and money that everyone can share. Contingency funds can be used if a task needs more people to finish on time, for example. The project schedule and budget hinge on time and cost estimates, so it's important to get them as accurate as possible.
Using a project you're working on, decide which estimating method makes the most sense, then identify the people who can help you estimate. Finally, ask management to set aside contingency time and money so you can be proactive resolving problems that arise.
Bonnie Biafore has always been fascinated by how things work and how to make things work better. In this course, she explains the fundamentals of project management, from defining the problem, establishing project goals and objectives, and building a project plan to managing team resources, meeting deadlines, and closing the project. Along the way, she provides tips for reporting on project performance, keeping a project on track, and gaining customer acceptance.
- Defining the components of a project
- What it takes to be a project manager
- Using project management software like Microsoft Project
- Managing project scope, budget, and schedule
- Managing project resources, including people
- Managing project risk
- Initiating a project
- Identifying and managing stakeholders
- Identifying requirements and deliverables
- Developing a project plan
- Building a project schedule
- Assigning resources to tasks
- Understanding the critical path
- Running the project
- Managing teams
- Monitoring performance
- Closing a project