The Money Files

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A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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3 More Ways to Track Schedule Performance [Video]

What’s New in Project Resource Management (pt 5: Manage Team)

Comparing Management Reserves and Contingency [Infographic]

Collaboration Tools for Project Managers: Q&A (Part 2)

4 Steps for Managing Project Stakeholders [Infographic]

5 Tips for Better Project Estimates [Infographic]

Categories: estimating

When estimating feels like nothing more than a best (even educated) guess, how can you improve your project results? Great – or at least effective – estimating is something that can vastly improve your stakeholders’ confidence levels, help your team plan their work better and give you more chance of hitting your budget or time targets. So why does it feel so hard?

In this infographic I share 5 tips for making estimating that little bit easier. What other advice do you have for improving the estimating process with your team? Let us know in the comments!

You can read more about some of the ideas on this infographic in this article.

Posted on: July 18, 2018 08:59 AM | Permalink | Comments (20)

What’s New in Project Cost Management (pt 2)

What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.

In the last article I looked at what was different about Plan Cost Management, now that the PMBOK Guide®-- Sixth Edition is out and available. Today, I want to look at what’s different in the next process: Estimate Costs.

Estimate Costs Process

The second process in this knowledge area is Estimate Costs, and it looks a little bit different in the new version. There’s nothing amazing that is going to throw you for six, but the process does feel simpler and more streamlined. It’s just more logical. That’s a good thing!

We are still in the planning process group.

Inputs

The inputs have been updated and streamlined. Previously the inputs included the cost management plan, the human resource management plan and some specific documents. Now, the inputs are simply ‘project management plan’ and ‘project documents’.

You could say that this vague, but it’s more in line with other processes and knowledge areas that have been updated, and it’s more rounded. You could, for example, argue that other bits of the project management plan are important, not just those mentioned in the previous version. In fact, the guidance in the PMBOK® Guide does go on to say that the quality management plan plays a part.

Project documents is also explained to include the lessons learned register (which is popping up everywhere – also a good thing) and resource requirements. I like this new vague approach because it means you could even argue that things like the communications management plan and stakeholder management plan have a role to play – they aren’t mentioned in the PMBOK® Guide but in real life you’d want to incorporate the costs of stakeholder engagement activities and a cross-check against that plan would be helpful during your project budgeting.

Tools and Techniques

Tools and Techniques have had a revamp too. There are 3 new T&T:

Data analysis (alternatives analysis, reserve analysis and cost of quality – these last two used to be called out as inputs in their own right and now they are bundled up)

Project Management Information System (again this seems to be popping up all over the place, and is explained to mean spreadsheets, statistical analysis and simulation software (does anyone outside of large government/public sector projects actually use this?). This replaces the old ‘project management software’.

Decision making e.g. voting. I love how some of the ‘tools and techniques’ read more like leadership qualities or competences, but yes: you can use decision making to help with defining your estimates.

Vendor bid analysis and group decision making techniques have dropped out, but would be bundled into decision making.

Outputs

There’s a tiny change here: Activity cost estimates becomes plain old Cost estimates.

Aside from that, there’s nothing else different about the outputs. You still get out the estimates themselves, the documentation that sets out the basis of estimates and you update some documents as required.

Next time I’ll look at what’s new in the Determine Budget process. This has had quite a few updates, although they make the process easier to understand and easier to tailor, in my view. More on this next time!

Posted on: January 23, 2018 07:59 AM | Permalink | Comments (7)

4 Reasons Why People Need Estimates

4 Reasons Why People Need Estimates

Estimating take up far too much time and are, as my 3-year old says about everything right now, ‘a bit boring’. I have no idea where he picked that up from. Don’t judge me!

I digress. We need to do estimates. And if you are one of those strange people who LOVE doing estimates, then skip this article and go and read this one instead!

Take a deep breath, and think for a moment about why we bother to do estimates. In his book, Project Management for Humans, which is soon to be released, Brett Harned provides 4 reasons why estimates are important for people on the team.

1. Estimates help you cost the project

“Estimates are based on a level of effort and times,” Brett writes. “Typically, the cost of a project is based on the time spent on a project. Your estimate helps calculate a rough determination of that cost and sometimes whether or not the project is worth the investment.”

A giant estimate normally comes with a giant price tag, and that might mean you don’t go ahead with the project. Or you scale down the scope significantly so you still get some benefit and don’t have to spend half your annual budget on this one project.

Either way, knowing how long things are going to take gives you valuable information to make informed decisions about your project and whether or not it should go ahead in the current form.

2. Estimates help you staff the project

Estimates are created around specific tasks and the skills required to complete those tasks.

Your estimate therefore gives you clues about who you need to do the work. And in turn, that gives you a good idea about how long the work will take.

For example, a senior developer might take a week to complete a task, but your apprentice developer would take a month, and need someone else working alongside them to help check the work and support them during the coding. Knowing this you can then decide what’s more important: having the work done quickly or upskilling the apprentice. Or maybe you won’t have a choice, if the skilled developer is working on something else and isn’t available.

Either way, estimating the work and thinking of who is involved in doing it will give you invaluable information for your plan.

3. Estimates help you plan dependencies

If you know how long a task will take you can better plan for the impact it is going to have on other tasks or on other projects. The duration of a task can help you schedule the next set of tasks, or tell another project manager when they’ll be able to start work on their project (or task).

For example, if you are tying up your senior developer for 4 weeks, in a business that only has one developer with those skills, the next project to use that person will have to wait until they are free. That’s a dependency on that skilled person.

You have a number of options to deal with that dependency including changing the project priorities so the other project gets the resource before you if that project is ‘more important’, buying in external skilled resource if you want to do both at the same time, or even having someone else with less ability work on it so you can at least make a start. But you need to know that you have a problem with resourcing and dependencies before you can start to come up with solutions to address it.

Here’s an introduction to dependencies and constraints on projects. Even knowing that your project doesn’t have dependencies on any other work is a big help with your planning because it frees you up to get on with things safe in the knowledge that your team isn’t messing anything up for anyone else. (Of course, that might change if a new project is approved – so don’t take it for granted.)

4. Estimating creates agreement and buy in

“Working with a team can often be a challenge, particularly when no one is in agreement on the project,” Brett writes. “Working together to produce an estimate can be a great way to pull the team together to talk about staffing, responsibilities, process, and timing. And guess what, that all helps produce a solid estimate.”

I covered this in my book too, Shortcuts to Success: Project Management in the Real World. I highly recommend that you share all your budget information with your team, from the moment you start to work on estimates through to the budget spreadsheet and forecast rates.

Working together will help you gain collective responsibility for the dates and scope of the work. You can hold each other accountable and no one can turn around and say that they weren’t aware of the deadlines or their responsibilities. That’s huge, especially on projects with tight deadlines and remote teams.

So, estimates benefit you and your team in lots of ways, and they are a part of your project to just get on with, get done and then start using. They can feel like the start of the real detailed work, the prelude to the fun part of building, but they help set you up for success and a smooth delivery. What do you feel about estimates? Let us know in the comments below!

Posted on: June 21, 2017 09:59 AM | Permalink | Comments (7)

5 Quick Estimating Tips [Video]

Categories: estimating, video

Here are 5 quick tips to help you with project estimating.

For a more in-depth look at some of these points, check out this article on project estimating.

Posted on: January 08, 2017 11:59 PM | Permalink | Comments (2)

Estimating 101 with Cesar Abeid

Categories: books, estimating

Cesar Abeid has a new book out, called Project Management for You, and it’s a step by step guide to everything you need to get started with managing a project. You may feel that you have enough experience to not need a beginners guide to project management, and you may be right. Still, it doesn’t hurt to refresh ourselves on the basics every so often, and that’s never more true that on topics relating to project budgets. Because if you mess up your project’s finances it is very difficult to recover your credibility and the lost cash!

Here’s what Cesar has to say about project estimating for budgets.

Estimating a Work Package

Cesar breaks down estimating the cost of a work package into three areas: people, tools and materials.

People: “Estimate how many hours/days will be required by the person responsible for the work package, and calculate how much that will cost,” he writes. This, he says, is the best way to go if you are paying your team members for their time and they are billing you in hours or days. If you plan to pay them a flat rate for the task, then he points out you’ll need a quote to use as a estimate.

Tools: Think about the tools you need to complete the work package. “This determination will include actual tools, equipment, and software that you might have to purchase to enable your team to do the work,” he writes. Many of these you may already have but you might need additional tools in order to deliver this particular project.

Materials: If tools are what you need to do the project management, materials are what you need to do the work. Small projects, digital projects and other types of project may have very little here. “If you are building a deck or a garage, then materials might be the largest part of your estimate,” Cesar writes.

These three mini-estimates make up the components of the budget estimate for your work package. Add them up and that’s the total cost for the work package.

Estimating Your Project

“Once you have the estimate for each work package, add them up,” Cesar writes. “The resulting number will be the cost estimate for your project.”

This isn’t rocket science but you’d be surprised how often elements get left out. Check that you’ve included all your work packages in your overall estimate.

Then check your workings the other way. If it’s a budget item that you know needs to be spent but there is no work package that goes along side it, should you be creating a work package to cover that element? If not, how are you going to track and monitor that expenditure as the project goes along? Don’t make it easy to trip yourself up later.

Work with Ranges

I am a big fan of working with ranges because they help set expectations for project stakeholders and provide you with a bit of leeway. Cesar says the same. He advises estimating twice for each element. The first estimate is based on the best case scenario (say, $100) and the second on the worst case (say, $200). Together they give you a range of financial confidence (the task will cost between $100 and $200).

It can be difficult to convince your sponsor to understand ranges. There’s a good range (ha ha!) of comments on this article about how challenging it can be to talk to your project sponsors about why this way of thinking is beneficial when it comes to project finances. Sponsors like hard, precise numbers and with many projects that have an uncertain outcome that isn’t as easy as they’d like.

Plan with Confidence

Cesar concludes by saying that your estimating gives you the data you need to plan with confidence. If you’ve done the same for duration estimates as well you are in a good position to know how long your project will take and what you need to pay for it. With this information, you can make decisions about tasks and expenditure as well as the people you need to involve.

He writes:

“If you can estimate your cost and time based on the requirements of your project, the constraints that are present, and the resources available to you, you can plan with confidence and make promises that you know you can deliver on.”

How do you plan with confidence? Let me know your tips for estimating and planning in the comments below.

Cesar Abeid’s book, Project Management for You, is available in print and ebook. Find out more on Cesar’s website.

Posted on: October 16, 2015 12:00 AM | Permalink | Comments (4)
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