Estimating properly--including leaving resources (time, money, people) for slack and lag time as well as a "management reserve" for unexpected issues is plain and simple, due diligence.
I've used PERT estimating--I know, older than the hills, but it works--and I've used Critical Chain Method to come up with some reasonable estimates of how long it will take to do a project and how much it will cost in resources. When a customer says that's too much, I always ask in a tactful way what they estimated and how they arrived at it. Almost every time I heard "we thought it would cost about _____". In other words, they pulled a number out of...the air. Where we used some sort of formalized estimating method, the numbers were fairly close (plus or minus a certain factor).
Surprisingly, the PMBOK does not state anywhere that a lack of formalized estimates is a due diligence failure and indicative of poor project management and sponsorship.
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Just thinking in term of what could go well (optimistic evaluation) and what could go wrong (pessimistic evaluation)is a very valuable exercise. And document your hypothesis; this is the beginning of a risk analysis.
When you sum the means of all evaluation and that you take into account the "sum" of the standard deviations (I know this is not a simple addition), you can then come up with a total evaluation that might look like: "it should cost between x$ and y$ to get the job done".
I prefer to give that kind of estimate (between X and Y). If my boss wants a single estimate, than I stick on the "Y" figure!
When you sum the means of all evaluation and that you take into account the "sum" of the standard deviations (I know this is not a simple addition), you can then come up with a total evaluation that might look like: "it should cost between x$ and y$ to get the job done".
I prefer to give that kind of estimate (between X and Y). If my boss wants a single estimate, than I stick on the "Y" figure!
In our world of PMO and governance the estimating model at the time approval is at a high level. Risk is high as we start the ride of a new project (PMBOK). Estimates & re-planning will be revised at each phase with approval to move forward, being granted by the steering committee: Detailed requirements, solution and design. Our project management framework measures the success of the project based on the estimates given at the time of design. At this time verification and validation of the requirements are checked (CMMI). Therefore, resulting in a more accurate estimate based on a better understanding.
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