5 Estimating Strategies to Keep Your Projects Profitable

In my work as a software developer, I spend a great deal of time on project estimates. The ability to effectively estimate the time and effort it will take to complete a project can be the difference between making a nice profit and descending into the red. Unfortunately, as I’ve told customers and colleagues before: “The one thing we know about estimates is that they are wrong. If they were accurate, we’d call them something else.” Here are five estimating strategies that can help you be more accurate, keeping your projects profitable and on schedule: 1) Keep it small. Break down your project into tasks that are no larger than a single day of work (and even smaller if possible.) The larger the pieces you are estimating, the more likely you are forgetting a task or step. For example, instead of the task “pack my house” with an estimate of 2 days, break down the job into packing each room (or closet and dresser). You’ll find that when you add the time back up, you will end up with more time than your original number. 2) Two minds are better than one. This can be tricky when you are a freelancer, but if it is possible, have someone else review your estimate, especially on a larger project. Or even better, have them put together their own estimate separately, and then compare them later. If you both come to roughly the same numbers, you can feel more confident that your estimate is accurate. 3) Take a break. If you can’t have someone look over your estimate, give yourself a few days to clear your head. I try to give myself at least 2 days between putting together a first estimate and producing the final bid. Often walking away from an estimate for a few days helps me to see tasks that I have been missing. 4) Use padding for protection. A lot of people build a "fudge factor" or padding into their estimates. The idea is that there is uncertainty in every estimate, and we tend to under-estimate the effects of that uncertainty. Therefore, it makes sense to add some padding to the estimate, knowing that inevitably there will be something we forgot to include. Many people recommend doubling the overall estimate as a way to address this concern. Personally, I prefer doing this at the task level, not the project level, and to do it based on my confidence of the specific task’s estimate. For example, if one task is particularly familiar to me and I am relatively confident about the estimate, I might add a 10% fudge factor. But for a task that I am less confident about, I will add a more aggressive percentage, 25% or more. I do this instead of simply doubling the estimate because an estimate that is too high might mean that my bid is too high. I’d rather have an accurate bid than one that is so high that my bid loses out to someone else! 5) Make people accountable. It is preferable for the person who will actually do the work to estimate their own tasks. Thus, if your estimate includes tasks that others will perform, get them to estimate the time involved (or at least get their feedback before you finalize your estimate.) This is especially true in the software development world, where a task that would take one developer 2 hours might take another developer 10. Think about how a difference that large could affect your project schedule! Bonus Tip The past is your friend. Historical information is the best predictor of the effort required to complete a project. Have you previously completed a similar project? Examining how long another project took can give you clues about how to estimate this project. And even if past projects aren't exactly the same as the one you are estimating, you may still find there are lessons to be learned. I use a spreadsheet template for my estimates that contains tasks that I have performed on a lot of other projects. When I'm creating my estimate, I can easily delete the tasks that don't apply, but at least I don't have to worry that I have forgotten something obvious. Keeping these tips in mind should help you to create better and more accurate estimates for your projects. 2008-03-08T14:45:41Z

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5-estimating-strategies-to-keep-your-projects-profitable

2008-03-08T17:05:36Z

A poor project estimate can take a great business opportunity and turn it into an unprofitable nightmare. Here are some strategies for creating project estimates that are more accurate.

5 Estimating Strategies to Keep Your Projects Profitable

2009-02-24T09:43:21Z