Each project is unique. Whatever project estimation techniques you were using were probably successful. But they may not work with your new projects as your company grows.
Do you have a new service or product? Changing or expanding your business services? As your business grows, so does the size of your projects, increasing both the budget and complexity.
There are many project estimation techniques out there that you may not have considered. These can make your project estimation more accurate. The goal of project estimation is to complete the project on time and on schedule.
The following are four project estimation techniques that will help make you successful. They can also help your projects run well, on time, and on budget.
Analogous, or comparative estimation, is one of the project estimation techniques you can use when you don’t have a lot of information on your current project but have past projects that are similar.
In this case, you can reference the past projects. You can use historical information associated with them to create an estimate for the current project.
You take the data and even the anecdotal information from the past work and apply it to the new one.
This includes best practices and adjustments for mistakes made along the way on the old project.
This involves judgment on your part. What parts of that previous work best go with the current project? What parts do not belong? This applies even though the referenced project was most likely a successful one.
You can lend insight when using this technique. If you were not involved in that project, then this applies to the project manager who was.
This kind of estimation may not be as accurate as you’d like. This is a drawback, but it may be the best choice when you have too little data for the project.
As you know, no two projects are exactly alike, though sometimes it is the only, or best direction in which to go.
Top-down estimation is one of the better project estimation techniques to apply when you have less information available. You can gather enough to get started, and add more data as you receive it.
The breakdown structure is high-level. You can add estimates for work items based on data from previous projects to get quick, overall cost and effort numbers.
This method allows you and your team to react and adapt to changes as they come. Because the initial estimates are snapshots, they allow for fluid, or on-the-fly, changes.
Your team can add new information as it becomes available to refine your earlier estimates and add detail as the project moves forward.
The top-down method does lack detail. This makes it well-suited for a first look or quick estimate of a project to get it off the ground and assess its preliminary viability. But, it does not provide a solid picture and requires you to change the project plan as you go.
Bottom-up estimation, which we will discuss next, provides greater detail, though it comes with drawbacks of its own.
Bottom-up estimation is one of the most traditional project estimation techniques. When you have a strong level of details for the project, you can create a complete assessment of tasks and resources you will need to complete the project.
This method involves using a work breakdown structure. You estimate each task one by one. You then roll up all your estimates to get the total project estimate. Depending on the project management software you use, you can automate a lot of this.
This bottom-up approach calls for you to document all requirements. Then you can take a look at the big picture and the feasibility of your project management plan.
While this is a very accurate method of estimation, it is the most time-consuming of all the project estimation techniques. It can take weeks to months to gather all the known requirements and document them in your budget planning tool or system.
Once that is complete, you need to compile the tasks. From there, you can see a final delivery date and budget.
In some industries, such as the software industry, for example, this method has more severe drawbacks due to what’s called the speed of change. This refers to the rapid rate at which new development tools and new information becomes available.
Any project delay could mean that a competitor could make your current project obsolete before you have a chance to roll it out.
Parametric model estimating is more scientific than other project estimation techniques. It automatically and quantitatively calculates your estimates using detailed, historical date from previous activities.
While the automation may be quick, you will need good data to load for an accurate response.
Parametric modeling uses independent measurable variables from the project work in order to create an accurate project estimation.
For example, you start with the smallest variable to find the cost of building an office building. That variable is the cost to build a square foot area, or the number of installations per day or week.
The advantages of parametric estimation are that it’s a simple and quick method that yields more quantitative results than other project estimation techniques.
This method requires mathematical formulas. This makes it difficult to adjust for differences between projects. Some of these differences can be environmental, political and cultural differences.
After all, you cannot quantitatively estimate every cost or project event.
In the end, which of the techniques you choose will depend on the scope of your project, the needs of your project, and the project estimation and tracking tool you have at your disposal.
There are several other techniques out there, and we invite you to research them all. The four discussed here are some of the most common and among the most effective.