Estimates Are Just That: Changing Business Environments Create Estimating Pitfalls

  Agile   Cost Management   Estimating   PM Network  

It’s a mad, mad world. Large swings in global financial markets have become a regular occurrence, some of the strongest economies have turned volatile, and political instability is a growing concern in many countries. Businesses, not-for-profits and governments alike are in no hurry to allot more time and money to projects than absolutely necessary.

That rapidly changing business environment is taking a toll on the project estimating process.

“Any change in the business environment generates increased risk for schedule and cost—and sometimes it changes the interests of and benefits for stakeholders,” says Mohamed Hendy, PMI-RMP, PMI-SP, PMP, deputy project services manager at Oil & Gas Company, a construction firm in Cairo, Egypt.

Case in point: The most recent estimate for the project to build a high-speed rail network in California, USA soared to US$98.5 billion—twice as much as previously estimated—as a result of stretching out the schedule by 13 years.

“Before, customers were more accepting of estimates with a wider margin of grace. That’s no longer acceptable,” says Matt Wigle, infrastructure program manager for the U.S. Army in Kabul, Afghanistan. “We are headed down the path of providing more precise estimates in an environment that is not as precise and where costs fluctuate greatly.&…

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