This post is the first in a series of four about estimating project hours. |
Estimating is a precarious business – part science, a lot of guesswork, and a bit of psychic magic! The goal is to forecast the effort, time, and cost of a project with enough accuracy to avoid disaster. Project managers use some go-to methods to estimate projects. Some approaches are scientific while others are based on gutfeel and experience. And if you know people…there’s a little humor in the chaos too!
Project managers (PMs) and business analysts (BAs) typically coordinate, and subject matter experts (SMEs) add their fears. These initial estimates get blended, adjusted for unknown surprises, and finalized – sometimes after fighting it out in a debate, or we might get fancy with an adjusted average from three-point estimating.
But everyone brings hidden biases to the table. The purpose of this series of blog posts is to dive into these hidden factors that shape estimates.
CYA – Sandbagging Estimates
Overestimating happens a lot. Sometimes it’s intentional, to cover your @$$ (CYA), which is known as sandbagging. But sandbagging throws a wrench in the system, messing up tracking and comparisons (as covered years ago by Perficient’s SVP of Corporate Operations and Global Delivery, Kevin Sheen). When multiple SMEs sandbag, you end up with a flood of unnecessary hours.
A better approach is transparently including contingency. This shows everyone the real estimate, highlights the allowances made, and gives better data for analysis.
Sometimes things just end up easier than expected, so the overestimation was not intentional. This is fine, it happens. But whether an agency bills for it depends on the contract. If it was written up as fixed fee (FF), then the hours may still get billed. But for time and material (T&M) agreements, the unused hours may get cut out before invoicing.
This’ll Be Easy – Lowballing Estimates
Underestimating is another problem. You’ve probably started to assemble some Swiss flatpack furniture, ignoring the instructions – only to realize it’s way more complicated than you thought. Even the Christian Bible warns against under estimating, with Luke’s tale of building a tower without counting the cost first. In this verse, it goes so far as to say you will be mocked for starting a project you can’t finish.
ERP migrations are a great example. Unfortunately, in the corporate world, many of us have seen an ERP project fall apart – the estimates blown out of the water! With past employers, I’ve seen multiple cases of this where the project is either scrapped entirely or drastically scaled back. If assembling a bookshelf can be tricky, imagine how off an ERP estimate can get! Millions of dollars spent before realizing it won’t work as expected. They should have used Perficient!
For larger projects, it is imperative to allow more time for estimating and built-in safeguards. You can do this by using the more scientific forms of estimation, gathering multiple perspectives, and allocating contingency time for those inevitable “unknown-unknowns.”
Conclusion
Early in my career, I felt terrible when my estimates weren’t accurate. I thought perfection was the expectation. But then a colleague who led our PMO group surprised me. He said he didn’t want all projects to come in under budget. He didn’t like to see his teams sandbagging. Instead, he aimed for half the projects to come in under and half over – reflecting honest, accurate estimating.
Speaking of honesty, I once had a client who overshared. He bragged about quoting a freelance project high – a yearlong engagement – which he finished in half the time and took the rest of the year off. He was proud of it! A few years later, he applied for a job at our agency, but we remembered that story. His questionable integrity caused us to pass on his application.
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If you are looking for a partner with integrity and honest estimating, reach out to your Perficient account manager or use our contact form to begin a conversation.
This post is the first in a series of four about estimating project hours. |
