Best Practices in Project Estimating
Project managers continue to struggle with creating accurate and meaningful project estimates to guide their project and stay on target. Too often, project estimates are created in a rush and propose values that are far below what the actual figure is going to be. I recently had a chance to sit down with Steve Callahan, PMP, Consulting Director for The American Strategic Management Institute and discuss some truly best practices for project estimating.
Steve, why do project managers have such a tough time with project estimating techniques?
Matthew, good question. Many project managers fail at project estimating because they only base their estimate on their gut reaction, their instinct. Often times when this is done, they have underestimated by a factor of usually 2-3 times from what the actual amount is going to be. What they do is automatic, it’s a habit. Project managers forget all the details that need to be included in the project as a whole. Other times, project managers are too optimistic of how many actual project hours they are really going to be able to utilize in the typical eight hour day.
Knowing this, what do you suggest is the best technique to utilize for estimating?
I would suggest that all activity owners break down their assigned activities into steps. I call this the to-do list. They should take the work breakdown structure approach further. Also, don’t forget to assign effort activity to each step of the process. Ask yourself, how long is this going to take to accomplish? Answering a question like this will also require the project manager to make assumptions regarding the project.
These assumptions are:
1. The number of people that will be assigned to actually carry out the project
2. The experience level of those that will be assigned
3. The full availability of those that will be assigned
4. How many productive project hours will be in each work day
5. The availability of any equipment that will be needed to execute the project.
It’s really critical that you document the answers to these current assumptions and that to make the assumptions you are using historical data to back up your estimate. I’d offer the following old saying as a final bit of advice: “Pay me now, or pay me later.” Whether you complete all the planning before hand or after – you’re eventually going to have to do it. I’d say pay me now because later there’s going opt be a lot more paying to do.
Matthew T. Sheaff serves as the Director for the Center of Project Management at The American Strategic Management Institute. For questions and or comments he can be reached directly at Sheaff@PerformanceWeb.org
