Inaccurate project estimation stands proudly among the primary reasons for project failures. Its consequences include anything from missed deadlines to a total inability to perform planned activities. That’s why a careful analysis of available time, budget and skill resources requires special attention.
Earlier, we’ve published an article about how project estimation worked in the prehistoric world (long story short – the same as now). Later, we’ve also made a thorough overview of cost estimation techniques. And now, it’s time to focus on project estimation.
Like cost estimation, time estimation is an essential part of project management. It serves to develop adequate timelines, set realistic deadlines and even prevent cost overruns. In this way, it determines the overall price of the project to a large extent.
To obtain highly accurate time estimates, the first thing you need to do is to prepare by collecting credible data:
- Information on project objectives, tasks and required resources;
- Risk analysis results;
- Historical data on the performance of previous similar projects, etc.
Another critical thing to do is to select the right project estimation method, and the present article can aid you with that.
Many of the techniques we’ve written about before are appropriate for project estimation as well. Here, we will take a look at some of them once more and determine situations in which they work best.
6 Best Project Estimation Techniques
1. Expert Judgment
This project estimation approach implies the use of specialists’ expertise to make forecasts. Sometimes, it involves the collection and analysis of relevant data with a consequent interpretation of results by an expert. In other cases, it can be based solely on a specialist’s opinion.
In either case, the process of expert judgment itself follows specific predetermined criteria, is built on a professional’s previous experience and combines theoretical knowledge with data and observations obtained from the practice. As for experts engaged in time estimation, they shouldn’t necessarily belong to the project team: external specialists are often the case.
Pros: The technique allows for taking unique factors into account that cannot be considered during machine-supported analysis.
Cons: This approach calls for personal opinions. Therefore, the result is often subject to human bias.
When and where to use: Expert judgment is best suitable for complex projects where quantitative estimation alone is not sufficient and is particularly advantageous for those managers who lack experience themselves.
2. Comparative / Analogous Estimation
Analogous project estimation refers to the comparison of upcoming projects with data on the progress and results of previously delivered similar projects.
Both positive and negative outcomes count: if the past project was a success, it could be referred to as a model for estimating and planning the new project. If it was a failure, the received experience might be utilized to make necessary adjustments in resource planning, risk prevention, work scope management, etc.
Pros: Analogous estimation is one of the fastest and easiest ways to estimate resources.
Cons: It is characterized by low accuracy and entails a high risk of erroneous conclusions.
When and where to use: The method works best for typical projects with similar work scopes. It is often used at the early stages in the project life cycle to get a ballpark estimate of how much resources would be required.
3. Parametric Estimation
The parametric technique uses such variables as duration (or cost) and the number of work packages (i.e., groups of related project tasks) to develop estimates for upcoming projects.
When implementing this method, you need to identify how many work packages your project will have and then calculate how much time a single work package will require for completion. The last step is to arrive at the total estimate with the help of the following equation:
Number of Work Packages × Predicted Duration of a Single Unit.
Note that for determining the duration of work packages, it is possible to refer to historical data, just like in the case of analogous project estimation.
Pros: The method ensures maximum accuracy of the resulting estimate.
Cons: A sophisticated data collection procedure and processing are an indispensable part of parametric estimation.
When and where to use: The technique is most suitable for projects with uniform work packages and repeatable tasks. Thus, it serves best in the fields characterized by a lower level of creativity, where project parameters can be relatively easily calculated during the early stages of the planning process.
4. Top-down Estimation
The top-down project estimation method is rooted in breaking down project activities into large blocks, predicting how much time it may take to complete them and summarizing the estimates. At the later stages in project planning, these generalized, large chunks of project work can be decomposed into smaller units as soon as more details are available to managers and then be estimated separately to get more accurate forecasts.
Pros: This technique offers a fast way to estimate resources and assess project viability.
Cons: It is characterized by low accuracy. The actual amount of resources needed can significantly vary from the initial top-down estimate.
When and where to use: The top-down project estimation method is frequently used in agile projects where fast results matter. It works best at the early phases in project planning when a rough and quick estimate is required.
5. Bottom-up Estimation
Unlike the previous technique, bottom-up project estimation aims to forecast the duration of the project based on the analysis of small tasks it comprises. When summarized, these individual estimates provide a full picture of how much time the project will possibly consume on the whole.
Pros: High result accuracy and relatively low variance in estimated and actual resources.
Cons: This technique is time-consuming and requires a lot of effort and expertise.
When and where to use: It is usually applied at the later stages in project planning when all the necessary details regarding project activities and a thorough work breakdown structure are available.
6. Three-point Estimation
This project estimation method originated from the PERT (Program Evaluation and Review Technique). It uses optimistic, most likely and pessimistic estimates to forecast the final project estimate. The resulting figure is calculated as a weighted average of these three separate estimates through the following formula:
(Optimistic Estimate + Pessimistic Estimate + [4 × Most Likely Estimate]) / 6.
Pros: The method is more thorough than the majority of estimation techniques focusing merely on one point during the calculation process. It is risk-oriented and helps managers to minimize the threat of cost and schedule overruns due to unforeseen events.
Cons: Significant data amounts and attention to detail are required to carry out three-point estimation.
When and where to use: It is advisable to utilize the technique in complex projects and by teams with enough resources at their disposal to perform it the right way.
Summary
The choice of an estimation method depends on project specifics, general practices in your company or team, a field where the project is performed and much more. Evaluate your internal capacities and current needs to select the right technique or combine several of them at different stages during project planning.
Remember that for achieving accurate estimation results, you must approach the task whole-heartedly. When estimating time for your project, you may benefit from implementing a piece of intelligent time tracking software, such as actiTIME. It provides data for estimation by analogy and similar estimation techniques and helps project managers monitor team compliance with developed time estimates. With enough effort and time invested, your project schedules and timelines will always be realistic and credible.
