Project estimation is like predicting the future. Making an accurate project estimate can be a daunting task for project managers. The project estimate is not only affected by known factors like budget, resources, type of project and its scope, but also unknown variables and risks. The project manager faces several challenges while estimating. However, accurate project estimate is essential for the success of the project and the organization. With the right project estimation techniques, the project manager can accurately make the estimations. Here are a few tips for accurate project estimation.
1. Discussing the project priorities
To create accurate estimation for the project, you need to elucidate the project priorities. For instance, in a project you can afford to incur more cost but cannot extend the time period. You have to let your team know the priority so that they can create an effective project estimate to accomplish the project successfully.
2. The numbers shouldn’t just fit the budget
It is a tendency of project managers to keep the estimate numbers within the boundaries of the budget. This type of project estimate may look idealistic on papers, but in the practical world it doesn’t serve any purpose and it becomes difficult to justify any excess later on. If the budget cannot be altered, try to find out what can be done within the limited budget.
3. Consider the risk factor
There are inherent risks in projects. Some of the risks are known to your team and some of them will be hidden. A quick risk assessment is not fruitful in such cases. Your team has to be aware of risk management to create an accurate project estimate. You have to implement the proper risk mitigation plan in your project estimate.
4. Detailed breakdown
Make sure to perform detailed breakdown analysis of the project. The more detailed breakdown will result in more accurate estimation.
5. Follow the proper planning process
After breaking down the project in smaller components, the three scenarios for each component must be analyzed – worst case scenario, best case scenario and most likely scenario. This analysis should be done especially for those components which are relatively risky or new for the team.
6. Clarify assumptions
Make sure that you and your team are on same page when creating project estimates. For instance if your team gives you an estimate of successfully completing a task in a given time, make sure that their assumptions of the task matches yours.
7. Include contingency
Always include contingency in your project estimates. Contingency can be in terms of cost, man hours and resources.
8. Include common activities
When making project estimations, the project manager usually overlooks common activities like meetings, edits etc. However, these activities are quite frequent in any project and must be considered in project estimation.
9. Use the lessons and data from previous projects
Reviewing the information from similar projects you have done before will help in creating better project estimates. If there is a task you have done before, you will have a clear idea about how much cost, resources and hours it will take to complete the task.
10. More than one project estimation technique
Always use more than one project estimation technique to create project estimations. This will help you make your project estimation more accurately.
Besides creating accurate project estimates, it is essential to send out and manage estimates on time. This would help in getting timely approval and starting of the project. Managing estimates well is important for every business for its smooth functioning and payment cycles. Using tools like Invoicera helps in managing estimates in an efficiently and getting paid in a timely manner.