The thinking process and the conversations that support three-point range estimating contribute to the development of more accurate project estimates. Short-circuiting the process may appear to save time, but it is a false economy. Time spent estimating is not a cost; it is cheap insurance.
This article is the second in a three-part series on accurate estimating.
The first article in this series ("In Your Estimation") focused on definitions since many people use terms such as estimate and budget as synonyms when, in fact, they are very different. Here is a brief recap of the key definitions that we will use in this article:
Estimate. An informed assessment of an uncertain event. Informed means that you have an identified basis for the estimate. Uncertain recognizes that multiple outcomes are possible.
Effort. Effort is an expenditure of physical or mental effort on the part of a project team member. Effort is normally measured in terms of staff hours.
Budget. A management metric that is derived from the estimate of the relevant work.
Baseline. A time-phased budget that has received all necessary approvals.
Let’s start with a fairly simple example to build a conceptual foundation, then we’ll build on those ideas to help you understand how to deal with more difficult estimating problems.