How good are you at estimating? It’s a tricky skill, and however good you think you are at it, there’s always a chance that you’ll make a fundamental mistake which will have a massive impact on your project budget or timescale.
In his book, The Project Management Book, Richard Newton sets out a number of tips for better project estimating. Here are my favourites.
Use your experts
“Estimation,” Newton writes, is best done by the most expert people in the team, with the greatest familiarity with the task in hand.” That means not asking your most junior project team members to estimate ‘as a learning experience’ unless you have expert estimates being prepared as well. Even the most expert of expert may not have had experience in this particular project task, but there is normally something that you can draw on to come up with a sensible estimate. This could be a similar (but different) project, an industry standard or something else.
Decompose your tasks
Breaking down your tasks into smaller chunks can make them easier to estimate, but only in certain circumstances. “Estimating 10 small unknown tasks is not inherently any easier than estimating one big unknown task!” Newton says. If you really have no experience or structured approach to estimating this brand new work, think about how you can get that from people outside the project team.
If you do have the skills in the team to estimate, you are likely to get a better result from breaking the tasks down into smaller activities that can then be estimated. Add the estimates together to get the overall time or budget required.
Estimate as a group
Take inputs from various different team members – everyone has a different background to draw on and could have something valuable to contribute to the process.
Don’t impose estimates on others
“Estimates are not only useful as a planning guide, but also as a basis for commitment,” Newton says. People are more likely to sign up to estimates if they have had a hand in preparing them. Many subject matter experts will reject estimates that they have not prepared themselves, especially if it looks like the estimate has been put together by someone who knows less about the subject than they do (i.e. you).
Factor in limited resources early
You can’t always deliver a project exactly by the book. So there isn’t much point in preparing resource estimates based on what you would like to have in a perfect world. Even if that is how estimating works in your project management manual, in real life you are constrained by the availability of resources and the other tasks that they are working on, so build this into your estimates now.
“Start by estimating the times the available resources will take to do the project, rather than planning around perfect resourcing levels,” Newton writes. “The problem of lack of or limited resources should be factored into plans at the outset and not treated as a surprise!”
This might seem an obvious estimating tip, but adding contingency is not something that should be overlooked. Newton recommends having one central pot of contingency so that it can be managed and allocated as required. It should be kept separate and not as an overhead to every task, otherwise the team will come to feel it is their right to use it. That isn’t the case! Contingency is for emergencies, so having it kept aside helps reinforce this.
Don’t add too much contingency though, or you will find yourself in a battle with your sponsor or line manager. He or she is concerned with stripping as much out of the budget and timescales as possible. You, as a project manager, could be concerned with underestimation and building in buffers. You’ll have to meet half-way, with a contingency pot that is realistic and yet appropriate for the risk and ambiguity present in your project.
As Newton says, “If you know nothing about something, then you are not estimating, you are guessing!” So make sure that you are your team approach estimating from a position of knowledge and avoid the guesswork.