Your Guide to Accurately Estimating Projects
Estimation is an invaluable tool for anticipating and managing project uncertainties. Accurate project estimates help identify cost and schedule requirements with relative precision, and reduce the risk of running out of time, resources, and budget during a project. But even with years of experience, project managers struggle with accurate project estimates.
One of the key benefits of LiquidPlanner is the ability to estimate tasks in a best-case to worst-case range, as opposed to a single-point estimate. It’s easier to estimate in ranges because it alleviates the pressure of not meeting a single-point estimate. But most importantly, it captures the the inherent uncertainty in a given task.
And with LiquidPlanner, updating estimates provides dynamic, real-time visibility to your project schedule. In this post, we’ll cover estimating techniques and the tools in LiquidPlanner that can help you estimate your project work more accurately over time.
Project Estimation Techniques
If you are building out a project for the first time or are new to LiquidPlanner, here are common estimation techniques to effectively manage projects:
The first step to estimating your project is to break down the actual work involved for your project. Although you may have a general idea of how much time the project overall will take, capturing scope based on estimating from the project level will likely result in wildly inaccurate estimates.
Starting with estimating the effort at the task level will result in greater accuracy of the total project effort. LiquidPlanner does the heavy lifting by totaling the project estimate for you.
Breaking Work Down
When you’re breaking down your tasks, do you wonder, “How detailed should I get with my task breakdown?” Once your task breakdown structure is finished, ensure that you’ve created tasks that you can reasonably estimate using this criteria: is the task Comprehensible, Manageable, and Assignable?
The initial task breakdown you create may result in some tasks that seem rather large. But how big is too big?
If you end up with a really large task, the actual level of effort involved will be difficult to comprehend and pinpoint with accuracy. If you’re at this juncture, break the large task down further into smaller components that are comprehensible and easier to estimate.
Consider this example: you’ve asked a team member to estimate effort for “Develop the Beta Chat Room Feature.” This is a pretty broadly defined task and could have a very long timeline. You’re likely to get a very high-level guess of the estimated effort, with a high degree of uncertainty. Instead, you might want to break the task down further, such as a task to “Create Add Friend Dialog.” This will help your team members estimate that chunk of work with greater accuracy.
Before you start breaking down your tasks into the smallest increments possible, don’t get too carried away! Breaking down a task to very minute levels of detail means that your team members will have more items in LiquidPlanner to monitor, track time to, post updates to, and keep track of throughout the project duration. You want the task to be manageable, so that you don’t create too much administrative work to manage small minutiae.
So when should you stop breaking down your task structure? Again, no simple answer here. But here are some questions to ask yourself.
Is the task a key action item that helps to convey progress on the project? If the task seems really small, will the ability to track percentage complete of this task be useful for your project reporting needs? Tracking minor task items may serve as a handy checklist, but may not be necessary for reporting on progress of your project.
When thinking about the manageable size of a task, you also want to consider your team’s workflow/methodology. If you’re an Agile team, small 1 to 2 hour tasks may be easy to manage and slip into an upcoming sprint. On the other hand, a small task for a manufacturing team may be more like 6 to 9 days in effort.
Ultimately, you need to determine whether the size of the task is manageable for a team member to update, monitor and track time to.
The third criteria to determine whether a task is reasonable in size is whether the work can be assigned to an individual. Tasks should be broken down to a point where you can identify who would be accountable for executing the work. If the task is so large that a larger team or department is accountable, you may need to break the task down further.
Best-Case to Worst-Case Estimating
In LiquidPlanner, estimates for remaining effort are given in ranges. Why a range?
Think about the last time you gave a single-point estimate for a task… “I’ll finish this task in six hours.” Did you actually track exactly six hours? Probably not. Single-point estimates rarely match the actual outcome.
It’s more realistic to capture a task in terms of a best-case to worst-case range, for example, “Run Tests on Sample A” will take 1 to 2 days of effort. Ranged estimates are also an ideal way to prompt your team to consider the factors that will sway a task towards best-case estimate or the worst-case estimate.
What if you end up with really wide range estimates, such as 8 to 45 hours of effort? That’s okay. Wide range estimates can be a useful tool to communicate the unique circumstances influencing the estimate. For instance, perhaps it’s new and unfamiliar project work. As you’ll see in the next section, it’s a best practice to keep reviewing those estimates along the way and updating as needed.
In LiquidPlanner, you enter best- and worst-case estimates. Then, LiquidPlanner calculates finish dates for you.
The Expected Finish date is typically the target finish date. You’ll also get an Earliest Finish Date calculation. Achieving this best case finish means everything went smoothly, and there was probably a lot of communication across the team as to how to keep things on track.
Of course, you could cut on quality and scope in order to achieve the best finish, but that isn’t ideal scenario. Likewise, the team should be aware of the problems or risks that could result in work edging closer to the worst-case estimate.
As a team, you can discuss what it would take to mitigate those issues.
Okay, you’ve broken down your project work. You and your team have assigned ranged estimates for each task, and your project is underway. Does that mean you don’t need to look at those estimates again? Not so fast…
Naturally, the more you work through the tasks in your project, the more certainty you have around the expected project outcome. If you started out with wide range estimates, it’s completely reasonable to tighten up your tasks estimates as you move through phases of your project. Do this by using project meetings to quickly review estimates for the next phase, or ask team members to update their task estimates right within LiquidPlanner.
Why is updating estimates throughout your project important? If a team member is making progress quicker than planned, when he or she updates the remaining effort estimate, LiquidPlanner will automatically update your finish date if you’re ahead of schedule.
On the other hand, let’s say a client added scope partway through the project. When you update the estimate in LiquidPlanner for the added scope, LiquidPlanner will recalculate your project finish dates so that you can communicate the new timeline with your client.
LiquidPlanner Tools for Managing Estimates
Are you worried that updating your estimates along the way will mess up your reporting? We’ve got you covered! LiquidPlanner has several features for tracking changes and reporting on baseline estimates.
Manage Sub-task items using Checklists
When you have a task with several important details to track, use Checklists to keep track of these items. Checklists can be assigned to different team members, and they can be marked complete to show progress. It’s a great way to keep track of the small details on a task instead of creating multiple small tasks that will be more administrative work for your team. Learn more about Checklists.
Set Daily Limits on Larger Tasks
You will probably have tasks with estimates that will take more than one day. For example, Joe has a task that will take 2 to 4 days of effort, but this isn’t the only task he’ll be tackling over the next few days. He has other projects to work on in parallel. Use the Daily Limit feature to set the maximum amount of time per day allotted for a task. This allows you to schedule how much time a team member should allocate per day for different projects or tasks. Learn more about Daily Limits.
Monitor Changes from Task Estimation History
Updating task estimates when scope has increased or decreased is a best practice because it keeps your project schedule up-to-date. But don’t worry! LiquidPlanner tracks anytime updates are made to the task estimate. The Task Estimation History captures the estimate that was applied, when it was updated, and who updated it. Learn more about Task Estimation History.
Compare Estimates using Baseline Reports
If you’re looking for a report that helps you compare the current status of your project to the estimates you made on a specific date in the past, the Baseline reporting feature is exactly what you’re looking for. Baselines help you monitor if you’re ahead of schedule, on track, or slipping. It’s also great for comparing estimates before you kick off your next project, to check which estimates were accurate and which estimates were way off. Learn more about Baselines.
Use Templates to Copy Estimates for New Projects
Most teams have repeatable projects, so they can use Templates to set up a general project structure that can be repurposed every time they kick off a new project. To save time in the project kick-off process, make sure you also include standard estimates in your project templates too. When you’re ready to duplicate the project template, all of the standard estimates will carry over to the new tasks. Learn more about Templates.
If you’re looking for more information on creating accurate project estimates, check out our eBook, 6 Best Practices for Accurate Projest Estimates.