Project Management

5 Factors That Affect Estimates

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A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from RebelsGuideToPM.com.

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Factors that affect estimates

When you are trying to put estimates together, whether it’s for time or cost, it’s important to be as accurate as possible because the estimates form the basis of your plan. They also set the expectations of your stakeholders, so getting them right – or as close to ‘right’ as possible – makes for an easier project for everyone.

So, what things could affect your project estimates? Here are 5 things to look out for when putting your estimates together – whether it is you doing the estimating or someone on your team.

1. Optimism Bias

We are predisposed, most of us, to look on the bright side of things. How long will it take me to drive there? 20 minutes? Then you do it and realise it took 40.

Being positive is fine, but it’s not realistic most of the time in a project environment. We need to look out for where being overly optimistic, or even just a little bit optimistic, is going to have an implication for the project.

Manage it by: Have several people do the estimate and then take an average. PERT is also a good estimating technique to use if you are worried about estimating bias because it takes best and worst case scenarios into account.

2. Pessimism Bias

I don’t know if this is actually a thing, but it’s the opposite of people being too optimistic. Estimates are either deliberately padded with extra contingency or people are unrealistically negative about the amount of time it will take them to get the work done.

Manage it by: PERT again. If you don’t want to use that, then at least get the estimates peer reviewed so that any that are unrealistic can be weeded out.

3. Experience

The experience of the estimator makes a huge difference.

Manage it by: Finding people who are skilled at what they do to work on your estimates. If you can’t get estimates done by the most experienced people in the room, then again a technique like PERT will help average them out. Alternatively, look outside your immediate team or company for people who could help you estimate.

4. Timescales

Have to do an estimate quickly? It’s not going to be very good because you won’t have had time to check out all the assumptions. Rushing makes for poor estimates.

Manage it by: Build enough time into the plan to do a decent job of estimating. If you absolutely have to have a quick turn around on  estimates get your best people on it and make sure that the person asking for the estimate knows that it is of the ‘quick and dirty’ kind.

5. Incorrect Spec

If you estimate from a specification or set of requirements and then find out that these are wrong, you are necessarily going to be wrong in your estimate too. Whether it’s because the users want more put in or some elements taken out, you’ll have to adjust your estimates as well.

Manage it by: It would be lovely to say that you must insist on fully-thought out estimates every single time but I know that isn’t realistic. You can only do your best and have a great change control process in place to deal with the changes when they happen along the way.

What else do you think affects the quality of your estimates? Let us know in the comments.

Posted on: September 12, 2016 12:00 AM | Permalink

Comments (17)

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Pravin Kumar Shrivastava Associate Vice President| Aithent Technologies Pvt Ltd Gurgaon, Haryana, India
PERT is the best choice to use for estimates. Why not any other methodology preferred in current times ? Would you share some light why Function Points is not so relevant ?

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Drew Craig Coach, Practitioner, Consultant, Humanist| North Highland Philadelphia, Pa, USA
PERT for sure. Good to also incorporate other estimating tools to gain a more pragmatic approach. Looking at similar past efforts can help greatly as well.




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Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates New Westminster, British Columbia, Canada
I totally agree with you Elizabeth but with regards to specs, sometimes not all specs are clear from the beginning of the project so you have to estimate it with a risk factor.

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Avinash Khare PM II| MAP-IT Consultant Project Management Ambernath (East), Maharashtra, India
I agree with PERT.Estimates done at the beginning will be more at risk than in later stage.I concur with Andrew to incorporate other estimating tools to be more accurate.

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Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

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Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Agree with Andrew similar past experience are great inside .
Found people are optimistic when it look familiar and often pessimistic when it new.
Rami and Avinash a right early estimate need have a greater contingency then later has project is more and more define.

avatar
Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
Sorry I see my comment multiple times for unknown reason

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René Notten Senior metrics consultant, CEO of Metrieken.nl and Metrics Quest| Metrieken.nl & Metrics Quest Netherlands
Hi Elizabeth, thanks for your blog on estimates.
If you want an objective and realistic estimate you can use function points and estimating tools. Also if you want to challenge the estimates of your staff you can use this method as second opinion. We base all estimations on the ISBSG.org industry data or - if avaliable - on client historical projectdata.
In case of changes it's not that hard to adjust the function point count. Also the estimating tools will do the recalculations for you in a minute.
Please contact me directly if you want more info on the subject.

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Kevin Harmon-Smith Programme Manager| SAP UK Dorset, United Kingdom
Great summary Elizabeth.
Protegra reports that the major estimating errors come from:
1. Poorly understood problem (0-30%)
2. Requirement Clarity (5-20)
And to me experience is the main factor that can bring down these levels of error.

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Farhan Liaquat Senior Consultant| ResoluteTechnologies Winnipeg, Manitoba, Canada
Very well explained!

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Karthik T Senior Engineering Manager| Nike Bangalore, Karnataka, India
Nicely explained, good tips. Thanks.

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Victoria Klymenko Kyiv, Ukraine
Thank you

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