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Top 10 Tips for Accurately Estimating Your New Project

Project Estimates
19 August, 2019

One of the biggest roadblocks for the successful completion of a project is the lack of proper estimation. At times, project managers tend to under-estimate or over-estimate a project. Estimation, thus, is a critical aspect of project planning, which mainly comprises of a quantitative guesstimate of project resources, costs, or duration. It’s quite tricky to pinpoint accuracy of costs, time, and effort; but if done correctly, it can mitigate risks and guarantee the success of your new project.
There are many ways to conduct project estimation. However, in this post, we will focus only on the top ten tips that can help you craft a reliable and nearly accurate estimate.

1. Know your scope

Before you do any estimation, you have to establish the scope of the project you are working on. Is it long or short, big or small?

Once you have those critical questions answered, then you can come up with the right decision on what resources you will need, to make the project a success. The clearer the scope is, the easier it will be to estimate your resources. Thus, it is good to have a clear understanding of the project scope before doing any form of estimation.

2. Understand the client or stakeholder’s needs

Before making any project estimations, try to dig a little deeper so that you can fully grasp the varied needs of your clients or stakeholders. At times, asking them isn’t enough to understand what the project needs to incorporate. The last thing you would want when dealing with serious clients is coming up with an ambiguous plan. So, identify and document all the expectations and review them with your clients before making any commitments.

3. Break the project into tasks

Smaller assignments are easier to estimate, and it’s less painless to create solid estimates for them. If any single project gets too big, the variables you are focusing on will possibly be too large and abstract. You may end up missing on some crucial things.

4. Know your team’s strength

Before taking on any project and being in a position to forecast its required elements, you must have a good understanding of your team’s strength/weakness. You will find it entirely unproblematic to achieve this, especially if you have an online expense tracker or time tracker in place.

By tracking previous labor and time costs, you will be better positioned to match up specific tasks with the employees who are capable in terms of performance and time-efficiency. In short, you will know which task can be performed by whom, and how his/her efforts can benefit your project for maximum profitability.

5. Communicate early and often

Since forecasting affects all aspects of a project, you would wish to maintain an open line of communication with all team members throughout the entire process. This helps to minimize misunderstandings and to ensure everybody is on the same page when it comes to project requirements.

6. Know your budget

Having a budget limit is very important. Why? This is because the set limit will act as a benchmark against which you will compare your final projections.

If you don’t know your budget limit, how then will you determine if the estimates match your pocket? Again, how will you find out if the plan is viable? You can only start a project if you understand its financial limits.

Note; when you are budgeting for a new project, you will want to have an effective system for tracking expenses. Everything must be accounted for during the budgeting and forecasting phase. Do not overlook the importance of seemingly trivial details and their ability to affect the project’s financial health.

7. Include a cost contingency

While you might want to label them as project costs, in the real sense, they are project estimates. You can never predict everything that will or can happen before kicking off a new project. It’s advisable, therefore, to include a cost contingency to cater for the uncertainties.

What amount should you then set aside? There is no clear-cut answer to this question. Some project managers add a certain percentage, while others adopt more complicated models which take into consideration the amount of risk involved. The choice is yours.

8. Evaluate history (examine past projects to ascertain how resources were over-utilized or under-utilized)

Sometimes project managers make erroneous estimates on time and budget without correctly evaluating their capacity to meet those estimates. Estimates are complicated, particularly when done via traditional methods. Usually, projections made manually either via guesswork, firsthand knowledge, or via the use of Excel spreadsheets may lead to imprecision.

Alternatively, when you use resource scheduling software, for instance, it provides clear analysis and reports of past projects. Remarkably, this acts as a starting point for building a library with quality reference information that can be used when forecasting.

9. Precedence to commonly disregarded activities

Project managers neglect supplementary activities most of the time. These include edits, fixing bugs, client meetings, and feedback, which are not given the precedence they deserve even though they happen quite repeatedly throughout the project. Not taking them into account can hurt the estimation efforts.

10. Estimation should be an ongoing activity

Keep in mind that estimation is an ongoing activity. Advisably, it should take place frequently throughout the project. In the primary stages, a high-level estimate might be needed to ascertain the feasibility of a project. Later on, more detailed analysis and estimate can be conducted, which is then gradually refined. That said, as a project manager; always resist the excitement to offer an estimate without having any comprehensive analysis to back it up.

Bottom line

Estimating appears as a dull practice; however, it is very crucial and can create an unmatched impact when done right. By applying the above 10 tips, you can mitigate risks, boost estimating practices, and significantly improve the success rate of your project.

All in all, it is good to note, estimation must not be 100 percent accurate, and may vary during the project’s life-cycle. However, it must be reasonably precise to be useful in the decision-making process.

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