Chapter 8 ideas- The art and science of accurate estimating

Estimating fundamentals

·         Project team members’ particular skills/knowledge will affect their productivity, and the more complex the tasks are, the more this productivity factor counts.

·         Projects rely on new technology – reliability of the new technology and the learning curve of the team

·         Incorrect timing predictions will cost money.

Classic mistakes to avoid:

·         Making “Ballparks in elevators”

·         Estimating without complete specifications

·         Confusing an estimate with a bid

·         Padding the estimate

Right ways to estimate

-          Have the right people make the estimates (experienced, get the project team involved, but they should not be the only people estimate & understand the goal and techniques of the project)

-          Base the estimate on experience

-          Don’t negotiate the estimate – negotiate the equilibrium

Three levels of accuracy

-          Idea evaluation or “ballpark estimate” (only take a few minutes, no project manager or team yet, can be off by 90%, good to starting planning)

-          Project selection or order of magnitude (consider pass projects, used to decide if formal project should be selected, take a few hours)

-          Detailed estimates or bottom-up estimate (considering all detail and WBS, most accurate)

Estimating techniques

#1: estimating is an extensive field of study and practice.

#2: apportioning (top-down estimating, begins with a total project estimate, then assigns a % of that total to each of the phases and tasks of the project)

#3: Parametric: basic unit of work = a multiplier

#4: bottom-up estimating: requires the most effort, but it is also the most accurate. Detailed tasks are estimated and then combined/rolled up.

Budgeting: 1. Internal (burdened) labor cost; 2. Internal equipment cost; 3. Material; 4. External labor and equipment; 6. Cash flow should be calculated.

It takes time and costs money to develop accurate estimates.

Every technique gives better results when it is used consistently.

The lessons of the past improve the forecasts of the future.

Comparing actual performance to estimates is essential to refining the estimating model. Without this comparison there is no science in the process, only gut feelings.

Many of the techniques work together. The art of estimating is knowing when to use which technique and knowing how much accuracy is required for the business decision at hand.

The variables that make estimates wrong are often beyond the control of the project team. Variables such as changing specifications, failed technology, bad weather, and team turnover can’t be accurately predicted, and yet they result in a variance from the plan.

It is apparent that PMs working independently never create accurate, useful estimation processes. It takes a conscious effort by the firm to establish estimating practices and make sure they are used on every project and updated over time to increase accuracy.