5 Common issues (and how to solve them)
Cost Management | By Brad Egeland | Read time minutes
Estimating project work is fraught with opportunities for things to go badly.
The customer wants new work done on the project - work that isn't currently part of the scope, of course. Or perhaps the project hasn't started yet and you're still putting time and energy into good solid work estimations that will turn into timeframes of effort in your master schedule. The possibilities are endless.
When situations like this arise, as they often do, what's the key to staying on schedule and budget AND ending in the black - profitably speaking, that is?
As much as you can hope for anyway since you're still really just estimating everything.
As I have managed projects, estimated work and checked my team members' estimates countless times, I've compiled five common issues related to coming up with good estimates on project work and change orders.
Basing the Work on Poor or Incomplete Requirements
Requirements are the lifeblood of the project. Without good, complete requirements, we can't make good, complete estimates. It just snowballs from there.
It's like building a house on sand…you'll likely never recover no matter how hard you try to fix things. Stop, take ample time and construct detailed requirements with your team and the customer. Then create a meaningful and more accurate estimate. And then - and only then - start the actual work.
Padding the Estimate
Developers are notorious for padding - sometimes doubling - estimates. I know…I was once a developer. And I'm a very good estimator.
One company wanted to hire me to replace its IT director, who was being promoted primarily just for that reason. There was a lead tech who management didn't trust, and the outgoing IT director did not have the experience and skills to know when he was being provided with padded estimates.
Watch out for these because it will throw off your schedule and likely upset your customers if they sense that you're padding your work estimates. Not a good place to be in with your project clients.
Relying on Optimism
Another mistake that estimators often make when planning out work is only looking at the sunniest of days. Be real.
Relying on overly optimistic work conditions and outcomes serves no good purpose because that isn't in anyone's best interest. It won't likely happen that way, and you'll end up underestimating cost, time, resource availability and probably a few other things that will negatively affect the project just because you were relying on everything to go "just right."
Being Rushed or Under Pressure
One of the biggest problems when estimating is trying to meet someone else's rushed deadline. Pressure from the customer or pressure from your senior management - either way it's a bad situation to be in.
Take the time you really need to work with your team - and the customer, if appropriate - to estimate the work properly and come up with the realistic numbers and prices that everyone really wants and needs…no matter how badly they say they "need it right now." In the end, they'll be happiest with a "real" estimate.
Not Taking Risks into Consideration
This is similar to relying on the optimism mentioned above. Risks are out there, and you must do some risk planning every time you are estimating work.
What if that vendor can't come through with the equipment on time? What if issues come up during testing?
Weigh risks, their likelihood of happening and factor that into the estimate. Some will be realised, but not all. Be realistic…again.
Not everyone is good at estimating. Test yourself. Estimate work before you ask your project team members to provide an estimate. See how close you are, and then discuss the differences. You might find you need to work on it, or you might find you're pretty good at it.
You need to know if it's a strength or weakness of yours because you should always be checking estimates that come to you as you're putting together change orders or project efforts and timeframes. Watch out for the five issues I've mentioned in this article, and you should be on the right track.
How about you, our readers? What other advice can we give to each other when estimating? What are your biggest concerns and trouble spots when estimating work efforts on projects?