Improving the Estimation Process

Wednesday, 31 August 2011
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Estimating is defined as an informed assessment of an uncertain event. For project managers, accurate estimates are the foundation for effective project planning and execution. There are many processes that have been developed to assist in the estimation process. Without proper estimating of project duration, cost, resources, risks, and other parameters, it is impossible to implement proper alternatives to ultimately make timely and sound decisions.

There are five (5) main steps of practice that an effective project management program

engages to maximize their success of projects, which include: project planning; project baseline; reporting; change control; and project closure. Each of these steps is individually built upon accurate estimating and control to ensure positive project results.

So what are some typical events that may impact the validity of your estimates?

  • Poorly defined scope of work-this includes misinterpreted work elements,

    or tasks that are not granular enough for where you are in the project life cycle (PLC).
  • Lack of knowledge for internal project cost.
  • Inflated optimism the proverbial rose-colored glasses way of guessing project problems or events.
  • Failure on risk management-ignoring risks and uncertainty will skew

    the estimates and become unrealistic.
  • Time pressure or unrealistic targets-this is a miscalculation of the time a project task will take and failure to communicate what is reasonably achievable.
  • Adoption of inappropriate estimation methodologies.
  • Failure to utilizing historical data.

So with so many factors that could possibly cause estimate imprecision, what can be done

to help make you more accurate?

  • Educate your project team and organization on estimating and require the appropriate project team members to prepare the estimate for their scope of the project.
  • Reach out to a subject matter expert (SME) with experience for scenarios.
  • Incorporate peer reviews and estimate validation processes into your PLC.
  • Incorporate Risk Management and contingency developed throughout the PLC.
  • Encourage estimating and re-estimating after each phase of the PLC.
  • Have accurate and timely documentation of change requests.
  • Research historical data on the project effort, schedule, cost, risk, and resources for lessons learned, and make appropriate adjustments. Statistical baselines

    should be created and revised periodically.
  • Use mock ups, trial runs, field studies, or other simulations as a guide.
  • Define work scope accurately and accurately track time against each task.
  • Basis of Estimate Document.

Project Estimation should include validation of project performance based against the plan, and should use metrics based on project estimates and actuals when making decisions. A sound risk management program should also be implemented and to capture risk occurrence for future reference. Risk management will reduce the uncertainties

and will enable better estimates.

Finally, estimation methodologies should be put in place to determine project health and make informed decisions on contingencies.

In conclusion, there is an unrealistic pressure to complete projects faster, cheaper, and more efficiently. Developing and implementing these control points into the estimating process, you increase the accuracy of your estimate and the probability of delivering projects accurately and timely.

About Integrated Consulting

Founded in 2005, Integrated Consulting is among Houston’s premier project management and controls organization that helps significantly enhance project success by providing unbiased project consulting and implementation, providing data for informed decision making and accurate forecasting and helping attain strategic goals. Involved with groups such as PMI, AACEi and Houston Pipeliners Association, Integrated Consulting trains and supports its clients on reducing risk, cost trending, monitoring schedules, project management, and implementing new systems and standards.

For more information on Integrated Consulting and our services, please visit, email or call 713-542-9084.

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