Estimating is a skill that is built out of knowledge, wisdom and experience. Accurate estimating can infinitely help chart a smooth course for your project. Counter to that, inaccurate estimating can start a project off on a rocky path and cause distrust among your stakeholders. In this article I want to walk you through some of the finer points of producing accurate estimates.
This is not a new revelation. Software estimating has been using the three-point estimates for quite some time. The concept is simple – you simply get an optimistic, realistic and pessimistic estimate and then use the following formula to come up with a final number for your task.
This approach allows you to build in known risk into your estimate. At the time of coming up with your optimistic, realistic and pessimistic numbers, a risk assessment to the project should have been done that lists all known risks to the project as well as their material impacts if they are realized. This isn’t by any means a bulletproof estimating strategy (spoiler alert: there isn’t one) but it does allow you to build in some risk management into your estimates.
I’ve written posts before on the value of collaboration and getting input from those who will actually be doing the work. Single-source estimating can be dangerous, especially if the person estimating does not have the knowledge or experience that a more seasoned resource may have. This is where industry knowledge really flexes its muscles. Knowing the proposed tools & technology, the client/project environment and having learned the lessons from past projects is invaluable to have when producing estimates. An added bonus of collaborative estimating is that the individuals who contribute to the estimates tend to feel a deeper sense of ownership to the estimates and will be more inclined to ensure that they meet those numbers.
Not all RFP’s are written with complete clarity and often times can lead to a number of questions that could greatly impact your estimates or even your project approach. It is crucial that the proposal lead get as much clarification as possible on any items in the RFP that may not be clear. In order to produce a proper estimate, there needs to be as much clarity as possible on what the estimate is for (i.e. what is the prospect asking for) as well as the approach being taken as part of the response.
Accurate estimating is a skill not easily attained. It comes from years of experience, deep technical knowledge as well as the wisdom to anticipate and address risks that could impact your work plan. Starting your project off with a solid, accurate estimate will help build trust from your stakeholders as well as reduce the pressure to outperform an unhealthy budget or schedule.