Why do so many projects come in late and over budget? Poor estimates are often a major factor in these projects. So, let's look at 7 ways to improve project estimates.
Define the project work
One of the top reasons for poor estimates is poor project definition. Project teams fail to identify significant work packages and associated project activities. Of course, these items are discovered later in the projects. How can project managers help overcome this problem? Gain buy-in and better definition by engaging stakeholders in a Work Breakdown Structure (WBS) exercise.
Ask the experts to estimate the work
It's a mistake for project managers to estimate the work. Have the subject matter experts estimate the work. Let the individuals who will do the work render the estimates. Want better estimates? Find people who have done the work before.
Use the correct estimating techniques
Use analogous estimating for early estimates and provide a wide range (e.g., six to eight months), not a single date. Complete the WBS and perform a bottom-up estimate later in the project. What can we do when estimating tasks we’ve never done before? Try the three-point estimate.
Refine your estimates
Like forecasting a hurricane and providing periodic updates, revise the estimates as you gain additional information. Furthermore, designate when you will revise estimates in your schedule management plan.
Track the effort and duration
Tracking and comparing effort and duration to the estimated effort and duration allows team members to improve future estimates. Like a golfer tracking his driving distance, sand saves, and the number of one-putts, serious project professionals track their statistics. They study their results and look for ways to save strokes in future rounds. You may not be a Justin Thomas, but you can improve your game!
Define contingency reserves
Identify risks in your project activities. Failure to identify risks at a work package or activity level can lead to activities taking longer and costing more than expected. For the significant risks, perform quantitative risk analysis and develop contingency reserves for the project schedule and budget.
Define and validate assumptions
Wrong assumptions lead to poor estimates. Explore the validity of the assumptions. Are the assumptions accurate? Are the assumptions complete?
How About You?
You may not be able to apply all of these techniques immediately. Pick one or two that you can implement such as the WBS and defining contingency reserves. Gradually add other techniques to progressively improve your estimates and your project results.