Good project estimation techniques are an important tool in the Project Managers toolbox. One of the largest challenges identified by organisations was planning. A core component of planning is good project estimation when done poorly, this can lead to project failures and going over budget.

Asking colleagues to estimate can sometimes be met with “I don’t know until I do it”, “I don’t have a crystal ball” and my favourite, “how long is a piece of string”, as long as you want, if you are in control, have the scissors and make a decision! Depending on the size of the project, estimating a project can be difficult. You will need to familiarise yourself with your team, deliverables, tasks, resources and the process.

What is project estimation?

A project estimate is a prediction of how much time and money is required to complete the project. When done well, it should allow Project Managers to deliver better forecasts to the stakeholders and make important decisions based on the funds and resources to successfully complete a project. Estimates may be required at varying stages of the project lifecycle, perhaps to seek funding or approvals at certain milestones.  The estimate will control the project and should be recorded in a document that project stakeholders can reference progress against.

Why is project estimation important?

There are four things to consider before estimating in a project.

  • Time
  • Requirements
  • Resources (People, infrastructure, materials and money)
  • Risk

If the estimation is lower than what the project requires, you will run into trouble by going over budget and over time. However, if you over-estimate, your organisation may face profit losses and it could have a detrimental impact on other projects that didn’t happen due to not enough resources or budget.

Top tips to improve project estimating

Of course, these apply not just to time but also to budget and resource too:

1) Best practice guidance

The Chartered body for our profession, the Association for Project Management (APM) cite 3 techniques for estimating:

  • Comparative estimating uses historical data from similar projects to extrapolate estimates for new work. Past estimates are scaled according to scope and complexity to produce new estimates
  • Parametric estimating uses defined parameters by which work can be measured. For example £30m per mile of motorway
  • Bottom-up, or analytical, estimating uses a detailed specification to estimate time and cost for each component of the work

By its very nature, estimating is speculative. It involves looking into the future and deciding what will happen. The more data available, the better quality the estimate. In the early phases of a project, less information is available. There are more unknowns and questions. This results in the Estimating Funnel, as more information becomes available, then the quality of the estimate improves.

2) People tend to underestimate

The majority of people underestimate. There are of course exceptions, but let’s stick with the majority. Why do they do this? Do they want to sabotage your project? No! In fact, people are trying to demonstrate how good they are at their job. “How long does that report take?…oooh, I can do that really quickly, I’m good at my job”. This typical thought process leads to an unrealistic estimate, something way too positive. You might be impressed with their estimate, but not reality when they don’t deliver. So take a step back, and a more structured approach.

3) Ask for how many hours over what elapsed time

Rather than asking for how long do you think this will take, let’s break this down into two very specific questions. Once we are all on the same page in terms of the scope (itself not to be ignored) then your first question should be about work hours “How many work hours does this task take?”. Once you agree on the estimated work hours, then ask the second question “Over what elapsed time can you undertake these hours on this task?”

For example, if the work hours estimate is 8 hours are they free tomorrow to work on this task tirelessly and complete it over the elapsed time of 1 day, or are they only going to be able to allocate one hour a day except for Fridays so it actually takes two weeks! Where you want to get to as a Project Manager is an agreement on a realistic deadline. Often we don’t need to get into the weeds of what Bob is doing Tuesday afternoon at 3pm, we don’t need to care about that after all Bob is a well-paid professional and can manage his own time (hopefully).

4) How confident are you in the project estimate?

Once you have discussed the total work hours and therefore resulting elapsed time think about how confident you are in this estimate. Is it based on past experience or a finger in the air? It’s worth asking how the team member came up with the work hours estimate, how much science is there in their thinking? The ideal is to refer back to historical data. “We did this task last year and the project schedule shows it took 3 weeks” is a great place to be, but so often this historical information is not available.

As a minimum, you might tag each task with a “confidence factor” of low, medium or high. Those tasks highlighted as low confidence may be worth further investigation or at least greater attention once they are underway.

5) Review progress against these estimates

Once each task is underway, monitoring progress against original estimates is very important. How are we progressing compared to our original estimates? Actuals data not only informs us about what has been completed but should also be used to help refine future projections. If everything so far has taken 10% longer than originally thought, perhaps this same variation should be applied to forecast work.

The very best estimates are based on good data. The information we have, particular from previous projects, then the better our future estimates can be. However, is your organisation set up to capture this information? Is anyone taking data from completing projects and presenting them at the start of new projects? This is one of the benefits of a good Project Management Office (PMO). Food for thought for your organisation.

On This Page

Monthly Newsletter

By: Baz Khinda

Baz Khinda
Commercial Director, BA, MBS, MCTS, CertBusM, PRINCE2, Microsoft P-SSP (Partner Solution Sales professional)

Published: 15 January 2018

Book onto an Event