Estimating the Accuracy of your Project Estimation
In most projects, the initial stages of planning and implementation are based on guesses rather than concrete, well-informed estimates. Often close to accuracy, these guesses tend to deviate from estimates in the long run. To alleviate the concerns of any serious mismatches, certain organizational standards are adopted for controlling estimate deviations and bringing them closer to the desired accuracy levels. As a project manager, it becomes important for you to gain complete information about the project, and be analytical while guessing all project pricing/ scheduling in advance. Here, it deserves mention that due to the iterative nature of planning, and because it is progressively elaborated, your estimates need to be updated as work progresses. Read on for some grounds/factors for estimating the overall accuracy of your project estimation tactics and tools.
Scope of the Project
You must have clear and transparent insights into the overall scope and nature of the project that has been entrusted into your hands. You need to focus on the actual work processes and keep any unwanted tasks at bay—especially those that do not add any value to your efforts. Along with other stakeholders and team members, it becomes essential for you to decide upon (and adhere) to the ultimate scope of the project. Thereafter, your estimates need to be chalked out accordingly.
Resources and Skill Sets
The cost estimates linked to your project are based on the resources and skill sets required for the completion of your project. As the availability of these inputs are variable and dynamic in nature, it becomes important to keep a close eye on the estimates shared in the initial stages of the project, and keep making changes accordingly.
Project Risks
Project managers usually incorporate all risk associated costs like management reserves and contingencies in their estimations. While contingencies are for expected financial risks, management reserves are created for handling unexpected risks like natural calamities. All direct and indirect risks have to be ascertained for estimating the overall budget for any project.
Volume of Workload
The total volume of work that you need to assign to each stage of the project, and to different members, has to be streamlined in accordance to all available resources. Once finalized, the volume of the actual work on hand can be used for making more accurate estimations.
Work Schedule
Clearly defined work schedules are instrumental in the proper allocation, implementation, and completion of all work on hand. With prior knowledge of the dates of delivery, volume of work, and other factors that are liable to guide the timelines of your project, you will soon find yourself in the right position to make reliable estimates.
Tools for More accurate Project Estimations
Analogous Estimating
This type of estimating is performed on the basis of available historical data in the organizational database (or project archival data). Though inaccurate in some cases, analogous estimation refers to an organization’s past experiences in handling similar projects with more or less the same set of resources.
Parametric Estimating
This estimation tool refers to historical data complemented by statistical calculations. Though more accurate than the results obtained from analogous estimating, it proves to be more time consuming.
Heuristic Estimating
Here, SMEs and project managers estimate diverse project phases on the basis of their experience and areas of expertise. For instance, it can be safely estimated that construction processes are likely to cost 36 percent of the total project cost.
Bottom-up Estimating
Formulated with a created WBS (Work Breakdown Structure) as its base, this estimation type requires aggregation of the costs of all lower levels of the WBS (Work Package).This is for developing a larger and more accurate estimate for the overall project.
Tips for Higher Project Estimating Accuracy
The ideas given below will boost the accuracy of your project estimates:
· Maintain a continuous "actual hours" database of all recorded periods spent for every aspect of your project. This data can be used for future project estimations, identifying historically accurate buffer times, and helping you perform work schedules in more realistic ways.
· Create well-conceived planning documents for project plans and specifications.
· Apply more than one method for making estimates and look for a common midpoint for gaining more accurate results.
· Develop a detailed task analysis of the processes that need to be performed at each stage of the project.
· Use a properly defined "complexity factor" that acts as a multiplier for determining whether an ongoing project is less/more complex than the previous ones.
· Go for more efficient and simpler ways of organizing and performing the work on hand.
· Consider phase-based approaches in really nebulous situations; here, the first phase should primarily focus on the requirements of gathering information and estimating. Identify different constraints, caveats, and assumptions for accompanying your calculations. They should bind the conditions that help in making your estimates more meaningful and accurate.
· Keep analyzing the proposed budget/ work schedules. It’s also essential to propose upward/ downward adjustments to better manage any or all project scoping criteria: schedule, quality, cost, and features.
· Develop your contingency plans with the right deliverable priorities in mind. Divide your estimates into "nice-to-have" and "must-have" categories.
As a last word, it is essential for all project managers to use a smart set of proactive estimation techniques for understanding the scope, planning, and constraints in all project conditions. With the right project estimation tools and control metrics in place, it becomes easy to improve upon estimating practices, mitigate and reduce risks, and escalate the project success rate!