Before I start to talk about estimating, I want to discuss something that you should never do, nor recommend in the PMP® exam… It is called ‘padding’
I am sure that you have come across a situation where others might recommend that, say, 10 per cent is added to an estimate ‘just in case’ This is padding and the estimator or is probably confusing this with risk management. They are adding 10% to reduce the risk that the activity will be either late, over budget or both.
This, and other incorrect project management practices may be listed as answer choices in the PMP exam, so beware! Estimating affects both time and cost and would therefore be applied to both the time management and cost management PMP knowledge areas.
Another general point about estimating is that whenever possible, the person who will do the work should be the person that produced the estimate in the first place. There are several reasons why this makes good sense:
Everyone has different levels of knowledge skills and experience, and if the estimator carries out the work, then such estimates will be based upon their own knowledge skills and experience, and is more likely to be realistic.
If the estimator is the person who would normally carry out such activities, then their knowledge skills and experience of this future activity will be high.
If it is the estimator carries out the work, then their sense of pride and professionalism will help ensure that the estimate is met.
If it is not possible to use the estimator to carry out the work, then the best compromise is the use someone of similar knowledge skills and experience
So let’s focus on the management practices that are acceptable:
Estimating should be based upon the work breakdown structure (WBS) to improve the accuracy of the estimate. It is well known that the breaking of the work down into smaller chunks of activity will produce the best estimates.
Using historical information from past similar projects is vital to improving estimates. Such information forms part of organizational process assets.
Whenever requirements are issued by management they should never be just accepted by the project manager. He or she should analyze the needs of the project, and from this deduce their own estimates, if necessary reconciling any differences in order to produce realistic project objectives.
The various project baselines should always be kept and only changed after any changes have been approved. These baselines reflect and contain the estimates generated at a given point within the project.
For example the budget should be managed against the cost baseline for the project.
Remember that all changes as stated above, are approved in integrated change control.
Although estimates are performed initially as part of creating the project management plan, the project manager will need to continuously re-estimate based on current progress thus far and the resulting future forecasts.
This is key to ensure that there are adequate funds both for human and non human resources, and that schedule aspects are adequate for the remainder of the project.
As a result of the points made above, plans need to be readily revised as and when appropriate after completion of the work.
Finally, I want to bring together the various inputs that will help you produce good estimates:
The project scope statement including any cost or time constraints will help you to gain a full understanding of what is included in the project and what is not. Therefore your estimates are more likely to be accurate, realistic and complete.
Using the work breakdown structure (WBS) and the WBS dictionary will give you clarity about the activities that need to be estimated, based of course, on the work to be carried out.
Remember that costs cannot be estimated until we understand the schedule and dependencies contained within the network diagram. The type and quantity of resources, both human and non human and when they are needed will have an impact on costs and time and hence on estimating.
When performing estimating remember to include costs for the management of the project as well as those needed to create the project specialist deliverables.
The availability of certain resources and their differing costs will have an effect on estimates and should therefore be understood before a plan is authorized.
The risk management plan or at least risks known at the time of estimating, will have an impact on estimates, and any risk management activities should therefore be included.
Finally, do remember that policies on estimating, any special processes or procedures that must be used will have an impact on estimating. This will also include adopting the company culture/industry and use of any existing systems, as the cost of complying with the above will need to be factored within the estimates.
If you need help to get the PMP Exam results you deserve, then CLICK HERE