From the course: Project Management Foundations

Estimate time and cost

From the course: Project Management Foundations

Estimate time and cost

“

- The two questions you get hit with most often about a project are, "How much time will it take?" And, "How much will it cost?" Estimating accurately matters because your estimates could determine whether it makes sense to run the project. You start by estimating time, because it affects both the project's schedule and cost. You also estimate costs that aren't time based, like materials and ancillary costs like travel. During initiating and planning, you might work with a core planning team to develop initial estimates. During project execution, you can get more accurate estimates from the people assigned to tasks. They understand what has to be done and know how long it will take, based on their experience. Plus, they're usually motivated to live up to the estimates they provide. Estimates don't have to be perfect right off the bat. For project selection, an estimate that's plus or minus 75% might be good enough. As you learn more about the project during planning, your estimates grow more accurate, ideally to plus or minus 10%. There are several techniques you can use for estimating. If you have similar projects that are already complete, use them as a foundation for your project estimate. With parametric models, you calculate work and cost based on some measure like the number of square feet for construction. This technique works when you have data from many similar projects. If a project represents uncharted territory for your organization, consider bringing in experts who are familiar with the work, like consultants or vendors. The Delphi Technique counts on several heads being better than one. First, you ask several experts to produce estimates independent of one another. You share the results with the group, keeping the estimates anonymous. You keep the estimates anonymous because you don't want anyone to be influenced by the reputation or authority of a co-expert. You then ask everyone to estimate again. Repeat this step a few more times, and then use the average of the last round as your final estimated value. For large projects or rough estimates, top-down estimating works well. You estimate phases or major components and then break those estimates into smaller pieces until you get to individual tasks. Estimating from the bottom-up means you estimate each task, and then add them up until you have the estimate for the entire project. You can also start with a top-down estimate and then revise it by working your way back up from the bottom to the top. The project schedule and cost hinge on your estimate, so it's important to make them as accurate as possible. For practice, based on what you know about the hospital's scheduling project so far, which estimating technique would you choose and how accurate an estimate would you strive for?

Contents