Categories: Estimating
The UK Government’s Infrastructure and Projects Authority’s Cost Estimating guidance talks about 8 principles for best practice estimating when it comes to working out how much your project will cost. I’ve already written about front-end loading, and today I wanted to look at another one that is really helpful – even if you don’t do huge scale infrastructure projects (which admittedly, the guidance is aimed at).
Estimates should be ‘reviewed and assured’. This is something you can implement regardless of the size of project – as long as you have more than one person in the team who has an opinion about the estimate.
The guidance says:
“Cost estimates that are reviewed and assured appropriately will be improved and become more reliable, further driving project discipline.”
You might already be doing this informally: a quick check in a team meeting, for example: “Is everyone OK with that if I put it into the figures at £5k?” But making a review a formal part of your estimating will elevate your practice and hopefully create more robust budgets.
Here’s how to do it.
1. Make it clear you will be reviewing cost estimates
As a team, explicitly call out that there will be a review and assurance process in place. Make sure you know what that is, and when it will be used. For example, as you prepare documentation to get sign off to move the project into another phase, or during backlog grooming etc. The whole process needs to be designed to remove ambiguity, so consider outlining what the inputs and outputs of the process will be and what triggers need to be reached to kick off a review.
The IPA guidance doesn’t mandate a review process but does say people in the review and assurance roles should be independent and make sure the process is robust and followed. Document the process so everyone knows what is coming. Ideally, the review team should stay the same throughout the project to provide some continuity, and now is the perfect time to plan to make that happen, allocating resources who can follow the project through its lifecycle.
If there will be different types of reviews (or reviewers) for different things, make that clear.
2. Find standard methodologies to compare against
So you don’t have any data in house to act as your benchmark? You will, with time, if you start collecting it now. Alternatively, check in with your colleagues or see if there is any available industry benchmark data that will help you assure your in-house estimates.
3. Schedule reviews
The easiest way to review cost estimates is a simple peer review process. Get colleagues to review each other’s schedule estimates (as these translate into financial amounts if you are charging clients by the hour) and budget estimates where these are not based on formal supplier quotes.
Where your project warrants it, block out the time for formal reviews. Independent assurance is particularly useful when it’s timed to coincide with ‘big’ events on the project like the approval of a business case for the next phase, for example.
Make sure people know when the review is coming so they can prepare for it and resources can be available to run it. Plus, the actual process takes time and you’ll want to factor that in to your schedule so executives aren’t expecting work to continue during that time, prior to the review being signed off.
4. Act on the data
The thing with getting other experts to weigh in on how much things are going to cost is that often experts disagree. That gives you, as the project manager, a role to play in making sure that any potential conflict is addressed and dealt with professionally, without it causing fireworks in the team.
Another time to act on the data is before the project moves into the next stage, whatever that might be in your process. If the estimates have changed or need to be refreshed, this is the time to do it. It’s fine that the figures are updated: what’s important is that they accurately reflect the costs as you see them at the moment.
Benefits of reviewing and assuring cost estimates
As you can imagine, there are plenty of good things about reviewing estimates as a team, not least that you should end up with better quality data. Here are some other benefits:
- The initial estimates will be better as people will want them to stand up to scrutiny
- Assumptions will be highlighted transparently
- There will be increased confidence in the estimating process overall
- It produces better data which in turn should lead to better decision making
- Experts are trusted to produce quality estimates which improves the whole culture around the project and elevates team members to strategic influencers.
As you can see, there are numerous reasons for using the principle of review and assure when producing cost estimates. How do you manage this process in your teams?
If you want to read it, the IPA Guidance is here (pdf).
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