Project Estimating – How to set realistic expectations on costs and timescales
Many projects fail to meet their expectations, not only when the deliverables are examined, but also in their costs and timescales. Too often the project estimate is wide of the mark because the project’s risks turn out to be greater than expected. Experienced project managers know the importance of understanding what’s being taken on before setting expectations.
The first step is to be sure that the full scope of the project is understood. Sufficient time and effort must be spent on specifying the project’s deliverables; only when each of these has been properly understood and agreed can the scope of work (SoW) be developed. It should be structured around the key deliverables, if the subsequent project planning and estimating are to be realistic.
The SoW should identify the major project risks. Technical risks usually attract the most attention, but all major risks should be separately identified. As well as quantifying their potential time and cost impact, the steps that can reduce their impact should also be set out. For example, use of a new sub-contractor could be a potential timescale and quality of work risk, but allowing for greater oversight and supervision should minimise this. With each major risk analysed and documented, a prioritised list will keep the project manager’s attention correctly focused.
It also makes sense to share the risk analysis with the client; the more informed they are, the more sensible will be their decisions on the scope and deliverables of the project.
It is now time to prepare the work, cost and timescale estimate. This is where project and resource management tools have an important role to play. Mature project organisations will use estimating metrics to populate their project templates, helping to produce consistent project plans. Comparing planned with actual effort for past projects in your resource management system makes it easy to review such metrics and keep them accurate.
Monitoring project progress
Once the project has started, the prudent project manager will use their resource planning tool for early warning of deviation from the plan. This gives time for corrective action to be taken. Simply comparing the actual effort spent (timesheets) with that planned can be very misleading, without a separate estimate of what’s been achieved – the earned value.
Whenever the project estimate is shown to be unrealistic, a re-estimate should be triggered. The estimate is the yardstick for measuring project progress, so must be updated whenever it is found wanting.