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.
Use the following process to estimate the total effort
required for your project.
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.
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.
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.
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.
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.
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%.
the total effort by adding up all the detailed work components.
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.
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.
type of disciplines approach to estimating will help you to create as
accurate an estimate as possible given the time and resources available to