Posted by: Gilad Lev-Shamur | September 6, 2009

Project estimations – essential part of project planning

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“Anyone who has never made a mistake has never tried anything new”

(Albert Einstein)

We are facing now an interesting problem (saying the least) in one of our projects: the estimated budget -which we surprisingly got few months ago- seems to have low connections to the actual tasks need to be done in order to complete the project. This is not the first time we face this situation, but I can calm you all, we will succeed to solve it. Even if our weight will be loosen through the process.

Our career as project managers can be built or vanished according to our estimations. Successful forecasts can improve your credibility while negative variances can destroy it (even if it’s not justified).

Projects (new products development, construction, IT…) start with estimations, cost and schedule estimations are part of them, and continue to update and produce new ones through all projects phases. All facts are known in the handover. It’s too late.

Facing a situation where your estimations are blown away (no matter if its budget estimation or specific millstone achievement)   put you in tension, cause problems with unhappy customer who start imagine how is wonderful plans evaporate, while all the time one thing must be remembered : estimation is just estimation.

“Rarely does the execution of a project proceed as initially planned. In a typical project climate, a defined and redefined scheduling process is required to predict, recognized, and address those factors and issues potentially affecting project performance”

 (Practice standard for scheduling – project management institute)

Project managers need to supply estimations all the time, even if they did not have the sufficient data. Let’s put it that way: usually they do not have the data. Awful project managers afraid to give one. They feel like someone is going to challenge their professionalism in case that estimation will prove to be wrong.

So, estimations are part of this business. You need to give them and make sure you update them until the project is completed. This is the only way we can plan ahead. No matter how you do it: put your finger in wind and pull a number, built an estimated high level schedule and update it in a rolling wave method, simulations, PERT analysis, parametric estimation or just asking someone. You need to do it.   

When I talked about proper estimations (whether is part of the planning phase or not) I refer not only to the technique the estimation is done, but also to the forum it’s done or communicated. Align expectations with our customers, sponsors and other project team is most important.

Some basic rule you should follow in order to improve your estimations:

  • What is needed to be estimated– I have several examples of project mangers give proper estimations for several packages in their projects, forgetting from the rest. My suggestion is working with the project WBS which include all disciplines (even if it is preliminary WBS. It’s better than working without it). Just by working if it, the PM might remember he forgot something. Same as relevant for schedule estimation (If you still did not produce one and pushed to give estimation, work with WBS from other similar project). 
  • Do not forget the indirect –You work in restricted area? Budget a security guard. Who do you think will polish your big validation lab after you completed the work?  
  • Do not forget the AFC (or buffers in schedule estimation) – in cost estimation, ask for proper AFC (allow for change). In schedule estimation, insert the proper buffers (it said that as you have more gray hair on your head, you buffers will be larger…). The most important with this AFC /buffer is to communicate them, explain why you took them and make sure they are not use for other things (like scope additions).
  • Involve the right people– when building the cost estimations or estimated schedule, get as more inputs you can from people actually doing the work: contractors, CMs, etc.   
  • Compare – same data coming from few directions is better from counting on single source.
  • Work in phases – update your estimation as your project is progress. For example : your AFC during the initiation phase should be larger than the AFC after your design is completed.

“Creativity is allowing oneself to make mistakes. Art is knowing which ones to keep. “ 

( Scott Adams, The Dilbert Principle)

What you should avoid:

  • Working alone.
  • Do not update your estimation.
  • Do not communicate and explain your assumptions.

“To avoid situations in which you might make mistakes may be the

 biggest mistake of all “

(Peter McWilliams, Life 101)

 

Good luck! 

Gilad

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