Friday, November 13, 2015

Project estimating without driving yourself crazy

Thought I'd share an exchange between me (in the PMO) and our Regional Stewardship team. They were asking how they can estimate project resource requirements at the early stages - when a lot of information is unknown.

People worry about this stuff - they don't want to be caught out either over- or under-estimating work. Here's a way to handle the uncertainty of early stage project estimates.

From: Angie Tarasoff
Sent: Thursday, November 12, 2015 1:30 PM
To: Regional Stewardship Team
Subject: Project Management Tip: Estimating without making yourself crazy

Hi!

It was great to meet with you all today!

Here’s what the Guide to the Project Management Body of Knowledge has to say about estimating:
Cost estimates should be reviewed and refined during the course of the project to reflect additional detail as it becomes available and assumptions are tested. The accuracy of a project estimate will increase as the project progresses through the project life cycle. For example, a project early in the initiation phase may have a rough order of magnitude estimate in the range of -25% to +75%. Later in the project, as more information is known, definitive estimates could narrow the range of accuracy from -5% to +10%. In some organizations, there are guidelines for when such refinements can be made and the degree of confidence or accuracy that is expected.
What this means:
  • While you’re developing an idea, it is not possible to budget accurately with a high degree of confidence. (In early stages, I’d advise -25% to +75% …this level of confidence assumes that the actual costs could be 25% less or up to 75% more. This is a finger in the wind estimate only.)
  • The more you and the team learn, the more confident you can be about estimating. (The estimates in a business case should be something you’re much more confident in. I’d probably go with -15% to +30%.)
  • By the time you get to developing a plan, you’ll probably want a more definitive estimate. (Here’s where you get to -5% to +10%...meaning that you could reasonably expect to go 10% over budget, or have as much as 5% surplus left over,
  • If you have a budget surplus on your project PMO policy requires that a cake be served to the entire project team.
It helps to determine these thresholds (and cake preference) beforehand through a discussion with key stakeholders, and to communicate the degree of confidence that you have in the estimate to stakeholders (just reference the thresholds).

The first few times you do this, pay really close attention to your estimating to see how you’re doing – do the thresholds need to be adjusted? Is there something consistently being overlooked, or under- or over-estimated? These guidelines are helpful in that they give you a range to shoot for.

I have to say that budgeting for a project was the one thing that I used to completely freak out over until I learned these guidelines. I like using these to give myself a little wiggle room –it takes away the pressure to be perfect on budgeting.

Happy Estimating!

Angie

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From: Regional Stewardship
Sent: Friday, November 13, 2015 12:32 PM
To: Angie Tarasoff
Subject: RE: Project Management Tip: Estimating without making yourself crazy

Thanks, Angie. This is great. I love wiggle room. And just to make sure we’re clear, would it be acceptable to substitute cake for the Project Management Office with bakery quality chocolate chip cookies?

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From: Angie Tarasoff
Sent: Thursday, November 12, 2015 12:35 PM
To: Regional Stewardship Team
Subject: Project Management Tip: Estimating without making yourself crazy

Totally acceptable to substitute cake with any high-carbohydrate baked good. It’s a guideline, not a hard rule. Please keep the PMO informed about treat status. ;)

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