The Advantages of Probabilistic Estimates
Project managers constantly grapple with the uncertain nature of their projects. One way we do that is by creating project estimates for our sponsors, executives and other key stakeholders. But why do we estimate uncertain future outcomes at all?
Two Reasons Why We Estimate
Firstly, we estimate to align expectations among ourselves, our project team members, our project sponsors and with other key individuals. We must all align about the uncertain nature of our project’s future, or we risk failing to live up to the expectations that others had about us and our projects.
If we don’t align expectations about our project’s cost, schedule and value, then we needlessly expose ourselves to an array of unfavorable outcomes and disappointments—even legal liability! When we estimate (time, money, effort, complexity, uncertainty and more), we’re creating a common understanding between ourselves and other people.
Secondly, we estimate to make better decisions today to optimize the likelihood of obtaining desirable project outcomes in the future. If our cost estimate shows we’re not in alignment with our project baseline or with our project sponsor’s expectations, then today is the day to make decisions that will create the alignment we want and need to be successful. If our agile project release date forecast is too far into the future,
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