|
|
|
|
Each month, Tom Mochal, President of TenStep, Inc. presents project management tips and techniques for planning and managing a project. TenStep, Inc. has a comprehensive, scalable project management process called TenStep (www.TenStep.com), as well as a project lifecycle process called LifecycleStep (www.LifecycleStep.com). Tom has also published a popular book called Lessons in Project Management that can be purchased at www.TenStep.com. Pipeline readers receive 20% off any TenStep or LifecycleStep purchase by entering the coupon code of "Pipeline" in their purchase.
There are different levels of estimating accuracy that are normally expected from the project manager (or project team) depending when the estimate is requested. When the project is first being proposed, for instance, your client may ask you for a high-level estimate of effort, cost and duration. The project is vague at this point and so the resulting estimate is going to be vague as well. In many cases, the estimate is only used for sizing purposes so that the originator has an understanding of whether the work will take 1000 hours or 100,000 hours. This estimate is a Rough Order of Magnitude (ROM) estimate and might be in the range of -25% to 75%. In other words, if the preliminary estimate of work was 1000 hours, you could propose the ROM estimate as 750-1750 hours. In fact, at this point, you might even be 100% off, or even higher.
As the project gets further into the approval process, the estimator becomes more knowledgeable in the expectations and deliverables, which allows the estimates to become more precise as well. When a project is being proposed for funding, you should be able to estimate the project with more precision, perhaps -15% to +25%. In other words, if your estimate was for 1000 hours, you may propose a range of 850 – 1250 hours.
When the project work actually starts, the project manager and team should revalidate the estimate after formally defining the work and building the workplan. The resulting estimate should now be closer to -5% to 10%. In other words, if your final estimate for effort is 1000 hours, you should feel that you can actually deliver the project in between 950 to 1100 hours.
| ESTIMATE | ACCURACY | PURPOSE |
| ORDER OF MAGNITUDE (CONCEPTUAL) | -25% - +75% | Evaluation of projects or alternatives |
| PRELIMINARY (BUDGET) | -15% - +25% | Establish initial budget, reserve funds for project |
| DEFINITIVE | -5% - +10% | Establish actual project budget, after Project Definition |
It is important to provide a higher degree of accuracy (around +/- 10%) as you get closer to executing the project. It doesn’t make sense to start a project with a high degree of uncertainty on the cost and duration. If you do have a high degree of uncertainty, the better approach is to break the project down into smaller pieces and only execute an initial project that you do feel more comfortable estimating. When this project is completed, hopefully you will know enough to estimate the remaining work to a higher degree of accuracy.
Would you like to receive project management tips every week? Sign up for the weekly TenStep Project Management Tip of the Week at www.TenStep.com. Read about Tom’s new book, Lessons in People Management, at www.tenstepstore.com/detail/2.14LessonsinPeopleMgmt.html.
