Project estimation is hard. Why? Because the only time you know precisely how long it takes to complete a project is when it’s done. Up to the point of delivery, teams use educated guesswork to predict the future. And the bigger and more complex a project is, the hazier that future is. Faulty estimates mean missing deadlines and breaking budgets—two of the main symptoms of project failure.
Being a skilled estimator is a crucial part of setting schedules, establishing budgets, managing resources and running a thriving team and business. Using the best online project management software for the job is a huge help, but knowing the methods and learning how to do them well is how you become a great estimator. There are a number of estimation methodologies to choose from—and where we’re going to look at five tried-and-trusted ones that work for all types of projects.
1. Expert judgment
This is probably the most common way people get a project estimation. Talk to the men and women with the best hands-on experience and understanding of the project requirements. Just make sure that everyone has the same understanding of what needs to be delivered. And try to find experts who will actually be working on the project.
2. Comparative or analogous estimation
If your current project is similar to past ones, take the data from previous work and extrapolate it to provide your estimates for the new job. Before proceeding, make sure to check whether those projects were successful!
Using a high-level work breakdown structure and data from previous projects, you can add estimates for each project work item to determine the overall effort and cost. The top-down method lacks detailed analysis, which makes it best suited for a quick first-pass at a prospective project to assess its viability.
This method uses a detailed work breakdown structure and is best for projects you’re committed to. Each task is estimated individually, and then those estimates are rolled up to give the higher-level numbers. (If you use the right project management software, it will roll up the estimates for you). This process makes you think about what’s required in order to take a step back to see if the big picture still makes sense. You’ll receive more accurate results than the top-down method, but it’s also a greater investment of time.
5. Parametric model estimating
This is a more scientific method that essentially auto-calculates estimates using detailed data from previous activities. Let’s say you have data from your last three office network installation projects. You can use this to get a days-per-workstation value or something similar. You then plug in the number of workstations for your new installation and out pop the estimates.
This can be a quick method but needs robust data to feed it. And because it’s all about the math, it’s hard to adjust for the environmental, political and cultural differences between projects.
But wait, there’s more. If you want to pop the hood and get more details on how to estimate projects with accuracy, download our eBook, 6 Best Practices for Accurate Project Estimates.