The Estimating Life Cycle
What are the steps for estimating?
Each business will have a slightly different approach to how to do project estimating, and your PMO will likely have a methodology that you are expected to use. For budget estimating, it maybe the corporate Finance department that sets out how estimates are supposed to be calculated.
However, back in the real world, I meet lots of project managers who don’t have the benefit of a fully-documented helpful process for how to do estimating, so in this article I’ll look at the 4 steps for working out your estimates to give you a headstart!
What is an estimate?
First, it’s worth us defining what an estimate is.
An estimate is a quantitative assessment of a likely outcome.
You will find far more detailed definitions of estimates elsewhere, I’m sure, but that does for me.
On projects you have to do quite a lot of estimating, for example:
Let’s look now at the 4 steps of project estimating. Again: if you have your own corporate methodology to follow, use that or you risk getting into trouble with the PMO! But in the absence of anything else, this 4-step approach is as good as any for getting the basics right.
Step 1: Plan to Estimate
The first thing to do is make a plan. As with so many project management techniques and processes, you need a clear idea of what you are supposed to be doing before you actually do it. This step is where you establish your estimating plan.
That sounds far grander than it really is. It isn’t a lot of work, and once you’ve estimated a couple of projects you’ll find you can do this step almost automatically, with very little effort.
You’ll also need any other documentation about estimating approaches or corporate or PMO standards that you have to adhere to. This all provides input into how you are going to create your estimates and helps you come up with a solid plan for how to approach the task of estimating.
Step 2: Create the Estimate
This is where you create your estimate. Basically, you use the techniques that you identified in your planning step to come up with your estimates. Work with your team to think about the resources, budget and time that you need. Use the tools you identified, and the guidance from your company to create the estimates.
I’d suggest you don’t do this by yourself, how tempting it might be. Hopefully the techniques you identified in Step 1 will recognise that it’s better to work collaboratively for estimating. Different opinions make a difference and you’ll get a better quality estimate – hopefully you chose to use techniques that take advantage of this!
Step 3: Manage Estimating
Here we manage the estimates. You’ve input your estimates into your budget or schedule and you are using them on the project.
However, you want to make sure that they are maintained and managed as the project progresses. This means you could be revising them appropriately as the team do the work, making sure they still accurately reflect what you think is needed on the project.
The most common way to do this is to compare your estimates to your actual figures as you go, and then tweak the upcoming budget figures, schedule or resource allocation appropriately to take account of what you are learning about progress on the project so far.
Step 4: Improve Estimating
This is where you apply continuous improvement principles to the way you work out your estimates. You could argue that this is an optional step – it doesn’t help you manage your current process – but I don’t think it’s too much to ask that you do this on all projects, all of the time.
You’ve learned from your experiences on this project, so take those lessons and look at how you can improve estimating on your future projects.
Calibrate your models, tweak your techniques and do any other changes necessary as a result of what you have learned on this project. This may mean you have to feed information and your experiences back to the PMO or Finance team so that they can take your feedback into account and make the required changes (or not). Still, even if you aren’t in control of the templates and models you use, it is good practice to try to help your company improve its processes where you can.
Those are the 4 high level steps for creating an estimate. See? It wasn’t so bad. Personally I think the planning stage is the hardest, because it involves thinking instead of just diving in. The rest of the process is all about using the tools you decided on and then working with them throughout the life cycle of the project.
In this video I share a few more ways to track project schedule performance. Sometimes it helps to look at the schedule in different ways, or to use different approaches to get updates from the team. Ultimately, the more tools you have available to you, the easier it is to flex your style to manage performance.
How do you track schedule performance? Let us know in the comments below.
There are a couple more ideas for tracking project schedule performance in this video.
I also mention this book, Healthcare Project Management, in the video.
In this instalment of What’s New In the PMBOK Guide®-- Sixth Edition, we’ve made it to the fifth process in Project Resource Management (see here for Plan Resource Management, Estimate Activity Resources, Acquire Resources and Develop Team). Today, it’s the turn of the penultimate process in this knowledge area: Manage Team.
This process name has changed from Manage Project Team.
Manage Team Process
This is the fifth process in the Knowledge Area. We’re still in the Executing process group.
This process is all about tracking performance of what people do, helping them out, giving feedback, switching in and out new people as required and generally looking after all the team-y things to keep the project moving in the right direction.
Team performance assessments, work performance reports and OPAs are still in. Human resource management plan is replaced by project management plan.
Project staff assignments has gone, and so has the issue log. There are some new ones that replace these.
Project documents: Team assignments falls under this category. The team charter is also a document you might want to consider as an input. As we have seen before, other documents like the issue log and lessons learned register can give you useful information on the types of things to consider or that might go wrong, based on past experience.
Enterprise environmental factors: In particular, HR policies might be helpful here.
Tools and Techniques
This section feels like it has been streamlined. Perhaps that’s because this process only deals with the people involved in the project. Other processes in this Knowledge Area talk about the non-people resources too, but this one is just about the team.
Observation and conversation, interpersonal skills and conflict management have been replaced by the general technique of interpersonal and team skills. This is far broader and can include other skills like negotiating and influencing.
Project performance appraisals, which related to progress updates and status reporting, etc, has been replaced by project management information system. There is information in the PMIS that will help you schedule the work, reassign tasks to the right person, deal with late work and so on.
There is not much change in the outputs.
In fact, the only thing that is different is that organisational process asset updates has been removed. Given that this appears almost everywhere, I think it’s strange that it has been taken out here. Why could you not have uncovered something important that would change a policy or process, during your work managing the team? Anyway, it is no longer in, so watch out for that.
As you can see, there hasn’t been much change to this particular process. There is still one more process to go in this Knowledge Area, so next time I will be looking at the final process, Control Resources.
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Budget “overs” are a way of filling the gaps in your budgeting process and acting as a safety net for when things go wrong, right?
Management reserves and contingency reserves are two very specific types of “extra” money in your project budget. They both have distinct roles to play in helping the business achieve the deliverables in line with the forecasted expenditure.
In this infographic I summarise the differences between these two different types of funding. Personally, I think contingency reserves are the more useful as they are tied to a specific event so they help improve risk management as well. What do you think?
You can read more about some of the ideas on this infographic in this article.
I recently did a webinar for the ProjectManagement.com community about my book, Collaboration Tools for Project Managers. It was the closing part of the April book club, and I spent some time answering people’s questions about collaboration tools. BUT… there were so many questions that I didn’t have the chance to get through them all during the session.
So, below I answer a few more of your questions. And if you’d rather watch the webinar and see what was discussed, you can do that here.
On with the questions…
We're seeing a lot of video on social media, is there a place for video in project management communications?
Absolutely. The rise of video has a lot to do with attention spans and people’s preferences for taking in information, and project managers can learn from that. We are – at least my generation is – almost programmed towards long reports and wordy documents. Even if you try to cut things down to an exec summary, it’s still words.
I’m sure people can think of other uses for video, why not share them in the comments section below?
Video, and other visual forms of communication, help you get to the crux of the message, the real heart of the issue, because they force you to communicate quickly.
I think there’s plenty of opportunity for project managers to use video. For example, training – you can use screen captures to show software, and that works for showing off prototypes or wireframes of websites too, for example. You can use video for spreading the vision or setting the objectives of the project when the team is split all over the place. I’ve even recorded a video intro to a meeting I couldn’t take part in, so that I knew that I had set the tone appropriately. I’m not sure if my colleagues felt that was a gimmick but it made me feel like I had done my absolute best!
Quick how to videos for your colleagues if you are supporting people learning new things, using video to allocate tasks, with a quick overview of what the task is. That’s not the same as being next to the person, but it is better than pressing ‘allocate task’ on a software tool and the task being received with very little context.
What's the easiest type of tool to start with if we don't currently have any collaboration tools in place?
There are two types of tool I’d suggest, if you don’t have a very mature technology environment.
Wikis are the first. They aren’t much in fashion at the moment but I still think that wikis are good tools to use and very easy to get started with. I’ve used them for business change purposes, tracking and responding to FAQ, to create a user guide. In that situation, we hosted it internally but used WordPress, which is a free content management and blogging tool, so it was a very low cost way of creating a dedicated project knowledge online presence.
On a different project I used a wiki as a way to store operational information about a particular site. On that project, we were working on a software implementation across over 30 locations, so keeping all that data straight in your head was hard work. Having a single place to record the unique features of each location and their deployment was really good.
Second, I would say an online chat tool. Something like Slack or Yammer is also very cheap to get started with, you can use it for just a project team or your whole business. If you need a real time chat tool, or want to play with one, then that would be a good place to start. Tools like that don’t do much apart from let you have conversations and share files with each other in real time.
How can we manage the culture change to a new collaboration tool?
This is a huge issue for many teams trying to get something new adopted, but the good news is that as project managers, we are already equipped to deal with the challenges!
It is all about having good business change practices. You want to understand the reason why you are adopting new tools. Then you can create a change management plan, understanding who is going to be affected, how they feel about it and how you are going to support them through the change. It could be training, or you may need to buddy people up. These are the same kind of things you would build into any IT project where there is a business change element and you are changing the way people do their jobs. You are introducing a new tool.
I think we often forget that we are users as well as project managers in this kind of rollout, so my top tip would be to remember to plan any collaboration tool deployment as a project, with all the business change, training and communications that you would do if you were delivering the project into another department.
How can I deal with my colleagues who just want to use the latest product they read about at the weekend?
Ah, shiny object syndrome! We see this a lot, and it’s not the first time someone has asked about it. There is so much choice out there about tools. That can make it hard to feel like you’ve really chosen the best one. The simplest way to address this is to make sure that you have clear user requirements. You need to know what you want to do, and then find tech that works in that way. Just because something has got a great write up at South by Southwest or in the New York Times doesn’t mean it is a great fit for your team. Sticking with requirements will really help you get a solution that works.
Having said that, you need to convince your colleagues that this is for the best! That’s a different conversation, but one you can focus around the cost for the company of constantly switching tools. If they feel there is something better, something that is a good fit for your organisation, then perhaps agree to review project management tools every 18-24 months, for example, so that you can keep fresh, while not exhausting the users with introducing new tools too frequently.
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