6 Successful Project Estimation Techniques in 2021
Project estimation is hard. Why? Because the only time you know precisely how long it takes to complete a project is when it’s done.
In Project Management, there are many different types of project estimation approaches utilized in various fields such as Engineering, IT, Construction, Agriculture, Accounting, etc. In order to effectively estimate a project, a project manager must align the following six constraints: Scope, Time, Cost, Quality, Resources, and Risk. The following are some of the usual questions that a project manager has at the start of a project:
- How much work is to be estimated (scope).
- How to estimate the project (techniques).
- How much time it will require to complete the project (Schedule).
- Who will be doing the project (resources)?
- What is the budget required to deliver the project (cost)?
- Any intermediary dependencies that may delay or impact the project (Risks).
We will next learn about the major parts of the project estimation techniques.
The 3 Major Parts to Project Estimation
- Effort estimation
- Cost estimation
- Resource estimate
Analogous estimation, parametric estimation, Delphi method, 3 Point Estimate, Expert Judgment, Published Data Estimates, Vendor Bid Analysis, Reserve Analysis, Bottom-Up Analysis, and Simulation are just a few of the techniques used as project management best practices in estimation. The project needs are usually only hazily known throughout the early phases of a project’s life cycle, and there is little information available to estimate the project. The initial estimate is based solely on assumptions and a high-level understanding of the scope; this is referred to as “Ball-park estimates” by project managers.
Project Estimation Techniques
1. Top-Down Estimate
When more information about the project’s scope becomes available, this technique is frequently used, in which high-level chunks at the feature or design level are estimated and then decomposed into smaller chunks or work-packets as more information becomes available.
2. Bottom-Up Estimate
When the requirements are understood at a discrete level, this technique is utilized to estimate the total project by aggregating the smaller workpieces. When the information is only known in bits and pieces, this is the method to use.
3. Analogous Estimating
When there is a reference to a similar project that has been completed and it is easy to correlate with other projects, this project estimation technique is applied. To arrive at a project estimate, experts’ judgment and historical information from similar operations in a referenced project are gathered.
4. Parametric Estimate
Independent measurable variables from the project work are used in this technique. For instance, in a software development project, the effort necessary to generate a work packet is calculated using the smallest variable, the cost to build a square foot area. This method improves project estimation accuracy.
5. Three-point Estimating
This technique uses a mathematical approach as the weighted average of an optimistic, most likely and pessimistic estimate of the work package. This is often known as the PERT (Program Evaluation and Review Technique).
6. What-If Analysis
This project estimation technique uses assumptions based on varying factors like scope, time, cost, resources, etc., to evaluate the possible outcomes of the project by doing impact analysis. In a usual scenario, the project estimate is done by conducting estimation workshops with the stakeholders of the project, senior team members who could give valuable inputs to the estimation exercise. The high-level scope is broken down into smaller work packages, components, and activities, each work package is estimated by effort and resources needed to complete the work package. The project may be detailed into the smallest chunk that can be measured.
The following activities are done during the workshop:
- Break down the scope into smallest work package, components or activities (WBS)
- Sequence the activities in the order in which they will be performed
- Identify the effort required to complete each activity
- Identify the resource estimate to complete each task or activity
- Identify the dependencies to complete each activity
- Identify the possible risks and assumptions
- Define the resource and cost estimate to the completion of each activity, component and work package
The above exercise gives an exact estimate of the project and the outcome of the workshop may be a project plan and a project schedule with effort, resource, and cost estimates for pmp professionals.