Padding: Is this really a "Professional Option" ?

Sometimes padding is forced upon PM's by the organization. Although, I don't ever use padding, it is a battle to convince the organization that your estimated cost are valid. If you are in an organization that always requires you to lower your estimates, then as a result PM's will up their estimates to end at a level which it needs to be.

I propose a simple concept of padding versus contingencies or even risk allowances.

Contingencies and risk allowances are calculated line items - transparent.

Padding is hidden, only the author(s) knows its there and how much there is - opposite of transparent.

It can become a nasty game - the costing people pad expecting the bosses to cut knowing that the costs have been padded. Ultimately the entire costing exercise is meaningless.

We sit with a lack of official definition for padding. The argument that padding is not the same contingency is totally flawed because it may or may not be true depending on how and why padding was done. You could argue that if you pad correctly you create a contingency in your schedule but if you pad price to inflate our profit margin you are unethical. So in the absence of an official definition in this context, we could also argue that to pad something is to make it more comfortable i.e. increasing my likelihood of achieving a milestone.

So to just state that padding is wrong or right can never be anything other than a subjective opinion made by somebody with knowledge about the particular situation.

"Padding is basically adding extra time or cost to an estimate because the estimator does not have enough information."

On R&D type projects, PMs often don't know what problems we will face until we find them. There is an old saying that "The Devil is in the details". We guess-timate that we will need a full time PM to handle those problems, even though we don't know the problems yet that we will need to solve later.

You can estimate based on hours to do tasks or the specific individuals who have to do the work and come up with different answers. If you look at a purely project based organization structure where people are dedicated to a project, the advantage is they are not distracted. The cost is that they are not always 100% involved. If you have a project based organization, it is inherently padded to give you that advantage of everyone being 100% dedicated to a project.

The way I look at it, padding is for the unknown unknowns, while contingency is for the known unknowns.

I learned a lot reading all the feedback on this question. Thanks Rami for posting it, it triggered a lot of insightful reactions.

Going back to the original question "Is padding a professional option?" I have to go with NO. I make the assumption that padding is always conscious. If done unconsciously, this would rather fall under the poor estimating abilities.

In addition, padding is a free pass to the student syndrome (Wikipedia = planned procrastination, when, for example, a student will only start to apply themselves to an assignment at the last possible moment before its deadline. This eliminates any potential safety margins and puts the person under stress and pressure).

@Peter makes a good point, that Padding is normally hidden, and @Keith hit the home-run with the statement that, “padding is for the unknown-unknowns, while contingency is for the known-unknowns.” If we recognize the above facts, then a PM also recognizes that without transparency they are blind to the recipes being used in the estimates.

My point is this: PM’s must accept the fact that human estimates are impacted by emotional factors. So, the question is this, do you ignore this fact, or do you “bring it into the light” and manage to it? My experience is that acknowledgement of emotional factors and discussing and giving these factors validity creates an environment that yields healthier estimates.

Let’s recognize the role that emotions play in all parts of project management, and go out of our way to make these aspects “part of the conversation.” Doing so, creates better outputs and outcomes.