Project Management

Use this process to estimate effort hours

Once you understand the effort that's required, you can assign resources to determine how long a project will take (duration) and then you can estimate labor and non-labor costs.

There are three early estimates that are needed for a project--effort, duration, and cost. Of the three, effort hours must be estimated first. Once you understand the effort that's required, you can assign resources to determine how long the project will take (duration) and then you can estimate labor and non-labor costs.

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Use the following process to estimate the total effort required for your project.

  1. Determine how accurate your estimate needs to be. Typically, the more accurate the estimate, the more detail is needed, and the more time that is needed. If you are asked for a rough order of magnitude (ROM) estimate (-25% - +75%), you might be able to complete the work quickly, at a high-level, and with a minimum amount of detail. On the other hand, if you must provide an accurate estimate within 10%, you might need to spend quite a bit more time and understand the work at a low level of detail.
  2. Create the initial estimate of effort hours for each activity and for the entire project. There are many techniques you can use to estimate effort including task decomposition (Work Breakdown Structure), expert opinion, analogy, Pert, etc. 
  3. Add specialist resource hours. Make sure you have included hours for part-time and specialty resources. For instance, this could include freelance people, training specialists, procurement, legal, administrative, etc.
  4. Consider rework (optional). In a perfect world, all project deliverables would be correct the first time. On real projects, that usually is not the case. Workplans that do not consider rework can easily end up underestimating the total effort involved with completing deliverables.
  5. Add project management time. This is the effort required to successfully and proactively manage a project. In general, add 15% of the effort hours for project management. For instance, if a project estimate is 12,000 hours (7 - 8 people), and then a full-time project manager (1800 hours) is needed. If the project estimate is 1,000 hours, the project management time would be 150 hours.
  6. Add contingency hours. Contingency is used to reflect the uncertainty or risk associated with the estimate. If you're asked to estimate work that is not well defined, you may add 50%, 75%, or more to reflect the uncertainty. If you have done this project many times before, perhaps your contingency would be very small--perhaps 5%.
  7. Calculate the total effort by adding up all the detailed work components.
  8. Review and adjust as necessary. Sometimes when you add up all the components, the estimate seems obviously high or low. If your estimate doesn't look right, go back and make adjustments to your estimating assumptions to better reflect reality. I call this being able to take some initial pushback from your manager and sponsor. If your sponsor thinks the estimate is too high and you don't feel comfortable to defend it, you have more work to do on the estimate. Make sure it seems reasonable to you and that you are prepared to defend it.
  9. Document all assumptions. You will never know all the details of a project for certain. Therefore, it is important to document all the assumptions you are making along with the estimate.
  10. This type of disciplines approach to estimating will help you to create as accurate an estimate as possible given the time and resources available to you.
10 comments
john.mayo
john.mayo

Often times the project schedule 'bottoms up' estimating techniques are constrained by agreed upon timeframes and durations established with the project charter. How does a project team overcome these often unrealistic estimates?

Ay Caramba
Ay Caramba

Your post recognizes a reality out there in the project management world, but as PM the best thing we can do is advocate for reality when managing our projects. In other words, it is essential to not commit to any deadlines or budget dollars before you have been able to perform a proper assesment of the project. Am I living in fantasy land? Hardly. The senior executives at my organization are constantly throwing deadlines and budgets at us without having properly investigated the project. Though they may seem unmovable, I have found that most project sponsors are willing to bend a bit on budget or time (usually not scope), if you can provide a reasonable justification for doing so. If you find yourself in a position where your project sponsor is being unrealistic and inflexible...well, that's where risk management come in.

Tom Carlisle
Tom Carlisle

As a PM, you're constantly juggling three factors; scope, due date, and resources (the three legged stool). If the due date has already been set in the project charter, that leaves you scope and resources. If two of the three factors have been set already, you have few choices. If all three factors are set for you already, you're not the PM - you're the Captain of the Titanic.

jtheires
jtheires

Caramba, Yes, I agree. As PMs, we are looked upon to provide leadership and management direction. Just "bending over" and accepting project constraints without a proper analysis is surrendering your responsibility as a PM. I like to produce estimates that have risk built-in. Three-point or (better) probabilistic/range estimates are an excellent way to express the uncertainty inherent in any estimate. If the mandated project constraints fall outside of the range estimate, you can say with confidence that, based upon the assumptions and estimating model utilized, the mandated constraint is impossible. If the constraint is within the range estimate, the PM can determine the level of risk inherent in the mandated constraint. For example, "We have a 23% probability of not exceeding the mandated constraints." This gives your decision-makers something to think about, before telling you to "just do it." As a minimum, they are well-informed as to the level of risk they are assuming with the mandated constraint. James Heires, PMP EZ-Metrix code counting utility www.ez-metrix.com

conor.crowley.ie
conor.crowley.ie

Good tip that I received a few years back is that the PM should own one "leg of the stool" i.e. scope, duration or resources. If anyone should make a change in either of the other two "legs" the PM should have the ability to address the change using his/her "leg". I know that this is an ideal world response but at least the PM should target this option.

Zenadu
Zenadu

The 3-legged stool is absolutely right, so if you are in a situation where the duration has been pre-defined for you, you must either add resources or change the scope to fit. What I did once in a similar situation was to propose what I called Phase I deliverables by the date imposed on me. I then listed everything that didn't make Phase I as a Phase II deliverable. I tried to incorporate core business functionality in phase I, and any functionality needed by a reduced amount of our business as Phase II. The plan didn't work, but I think it did open more dialogue and ultimately I did end up with a project plan that looked realistic -- they gave a bit on the date, we expanded Phase I deliverables and then squeezed in a few extras until everyone was happy.

pmaina2000
pmaina2000

"... If all three factors are set for you already, you're not the PM - you're the Captain of the Titanic." LoL! Funny - but True.

ZliaBR
ZliaBR

Perfect explanation...

jennifer.krause
jennifer.krause

As mentioned above, risk management is critical to planning, this includes estimates. Providing your sponsor, or decision makers with the impacts of each constraint it assists them in making the correct business decision. At the same time it documents your concerns for any future negative impact, allows you to consider mitigation strategies, and is evident that it was discussed for possible audits.

Ay Caramba
Ay Caramba

James, You bring up an interesting point about using 3-point and PERT to estimate task durations. It seems that many project teams are so "caught up in the rush" that they never feel they have enough time to develop a proper estimate, much less go through the effort to develop 3-point or PERT estimates. We find it to be a struggle to simply get team members to think in terms of effort-based estimates, rather than durations. That said, we continue to work on training our people to change the way they think about task estimating and management, allowing our PMs to more effectively push back on unrealistic constraints when required.