Estimating in Project Management practices

Estimating in Project Management practices is a very important practice and without it, your project may not be released on time and with planned resources.

When you have completed this chapter you should be able to demonstrate an understanding of the following:

  • the effects of over- and under-estimating;
  • effort versus duration;
  • the relationship between effort and cost;
  • estimates and targets;
  • use of expert judgement, including its advantages and disadvantages;
  • the Delphi approach;
  • top-down estimating;
  • bottom-up estimating;
  • the use of analogy in estimating.

Introduction to Project Estimation

In Chapter 2, we explained how to draw up a plan for a project. This involved allocating an estimated duration to each of the activities to be carried out. This allowed us to calculate the overall duration of the project and to identify when we would need the services of individuals to carry out their tasks. In this chapter, we will explore the ways in which these estimates can be produced.

WHAT WE ESTIMATE AND WHY IT IS IMPORTANT

The success criteria for almost all projects will contain a required date for finishing the project and some constraint on the amount of money that is available for the project. Estimates of the duration of the project and its costs are therefore crucial.

Effort versus duration

As well as estimating the time from the start to the end of an activity, it is also necessary to assess the amount of effort needed. Duration should not be confused with effort. For example, if it takes one worker two hours to clear a car park of snow then, all other things being equal, it takes two workers only one hour. In both cases, the effort is two hours but the activity duration is two hours in one case and only one hour in the other.

There can be cases where the duration is longer: for example, where someone only works in the afternoons on a particular task. Often activities take longer than planned even though the effort has not increased. This may happen, for instance, when you have to wait for approval from a higher level of management before a job is signed off.

This distinction between effort and duration can be particularly important when assessing the probable cost of a project, as on some projects staff costs are governed by the hours actually worked (typically where staff complete timesheets), while on others the costs are governed by the time people are employed on the project (even if there is not always work for them to do).

The effects of over- and under-estimating

If effort and duration are under-estimated, the project can fail because it has exceeded its budget or has been delayed beyond its agreed completion date. This may be so even when staff have worked efficiently and conscientiously. Allocating less time and money than is really needed can also affect the quality of the final project deliverables: team members may work hard to meet deadlines but, as a consequence, produce sub-standard work.On the other hand, estimates that are too generous can also be a problem. If the estimate is the basis for a bid to carry out some work for an external customer, then an excessively high estimate may lead to the work being lost to a competitor. Parkinson’s Law (‘work expands to fill the time available’) means that an excessively generous estimate may lead to lower productivity. If a task is allocated four weeks when it really needs only three, there is a chance that, with the pressure removed, staff will take the planned time.

Estimates and targets

Identifying an expected duration is very difficult. If the same task is repeated a number of times, each execution of the task is likely to have a slightly different duration. Take going to work by car. It is unlikely that on any two days this takes exactly the same time. The journey time varies because of factors such as weather conditions and the pressure of traffic. Thus, an estimate of effort or time is really a most likely effort/time with a range of possibility on each side. Within this range of times we can choose a target. An ‘aggressive’ target may get the job done quickly, but with a stronger possibility of failure. A more generous estimate is likely to expand the length of time needed, but have a safer chance of being met. The target, if at all reasonable, can become a self-fulfilling prophecy; with the commuting example, if you know that you are going to be late you may take steps to speed up, perhaps by taking an alternative route if the normal one is congested. Estimating can thus have a ‘political’ aspect. Some managers may reduce estimates, either to gain acceptance for a proposed project, or as a means of pressurising developers to work harder. There are clearly risks involved in such an approach, as well as ethical issues.

EXPERT JUDGEMENT

Effective estimating needs contributions from experts with experience and knowledge of creating the types of product that the project is to create and the techniques by which they are created.

Using expert judgement

Where do you start if you want to produce reasonable estimates? Although estimating is treated as a separate, isolated topic in project management and information systems development, it in fact depends on the completion of other tasks that provide information for estimates. For a start, you need to know:

  • what activities are going to be carried out during the course of the project;
  • how much work is going to have to be carried out by these activities.

For example, to work out how long it will take to install upgraded workstations in an organisation, we need to know approximately how long it takes to install a single workstation and how many workstations there are. We may also need to know how geographically dispersed the workstations are. The best person to tell us about these things would be an expert familiar with the tasks to be carried out and the environment in which they are to be done. As a consequence, most guides to estimating identify expert opinion or expert judgement as an estimating method.

‘Phoning a friend’ can be a sensible approach, but how do the experts themselves derive their estimates? There is a possibility that they have their own experts they can call, but at some point someone has to work out the estimate based on their own judgement – and the likelihood is that they end up comparing current tasks with previously completed ones and using the actual durations from those old tasks as a basis for the new estimates.

The advantages of using expert judgement include the following:

  • You involve people with the best experience of similar work in the past and the best knowledge of the work environment.
  • If the people most likely to do the work participate in estimating it – they will be more motivated to meet the targets they themselves have set.

There are, however, some balancing risks:

  • The task to be carried out may be a new one of which there is no prior experience.
  • Experts can be prone to human error – they may, for example, under-estimate the time that they would need to carry out a task in case a larger figure suggests that they are less capable.
  • It can be difficult for the project planner to evaluate the quality of an estimate that is essentially someone else’s guess.
  • Large, complex tasks may require the expertise of several different specialists.

The Delphi approach

One method that attempts to improve the quality of expert judgement is the Delphi technique, which originated in the RAND corporation in the USA. There are different versions of this, one of which is ‘planning poker’, but the general principle is that a group of experts are asked to produce, individually and without consulting others, an estimate supported by some kind of justification.

These are all forwarded to a moderator who collates the replies and circulates them back to the group as a whole. Each member of the group can now read the anonymous estimates and supporting comments of the other group members. They may now submit a revised estimate with its justification. Hopefully, the opinions of the experts should converge on a consensus.

The justification for the technique is that it should lead to people’s views being judged on their merits and reduce undue deference to more senior staff or the more dominant personalities.

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