Assumptions & Uncertainty : Project Estimating (Part 3)

In this third installment of my blog series on project estimates, let’s dive headfirst into the murky waters of assumptions and uncertainty! Think of these as the gremlins of project planning – they are full of secrets and laugh along the way as they trip you up. If you’ve read my other blog posts, you’ll know that I’m a huge fan of transparency. Those gremlins are hiding behind your assumptions, and if you don’t shine a spotlight in the shadows of uncertainty you’ll have some BIG holes in your project plan.

Making an @$$ Out of You & Me – Assumptions

Identifying and removing assumptions should be a priority for all project planners. Let’s face it, if you are running on assumptions, then you are flying blind. And if you allow those assumptions to remain, then your whole project is going to go into a tailspin. Project leadership is not a place for stunt pilots!

Unresolved assumptions can take many forms. You often notice them when someone seeks clarity but doesn’t receive a clear answer. “We’ll figure it out later” can lead to a crash landing for your project estimate. Take time to clearly outline what’s out of scope in the SOW. Clients may have unspoken expectations around best practices, while agencies focus on budget constraints. Be explicit about what’s not included.

With assumptions in place, your project plan will be incomplete. Your project estimates will be ripped apart. So how do you avoid this turbulence? Ensure you map out your flight plan! Use a “discovery phase” or a “sprint zero” to make sure you cover details early before the project implementation begins. During these planning sessions, your team and the client can get a clearer view of the skies.

The Uncertainty Paradox

Like the fate of Schrödinger’s cat, certainty in project management and estimation is elusive. If you don’t manage uncertainty, you might get scratched!

After your team provides their best estimates, you often hear, “They’ll never go for that.” Then you reduce the cost before showing it to the client. Congratulations! Now you’re negotiating with yourself – cutting scope or profit based on a gut feeling. Your uncertainty limits the project before the client even sees it.

Negotiations with the client can also add a layer of uncertainty. The agency gives an initial estimate, but the client has their own view of the final outcome. The usual approach of starting high, countering low, and meeting in the middle may seem straightforward, but it often undermines the project goals because it is based more on financial desires than on clearing up uncertainty in the project. Once the contract is signed, other choices arise and the limited budget weighs heavily. Schrödinger’s cat is still purring, and the outcome remains unknown.

Executive Summary

Executives love to start project requests and then pull a disappearing act until it’s time for final approvals. When you hand them the packet, they’ll flip right to the end to check the bottom line – skipping that executive summary conveniently placed on the first page. It wasn’t added as a diversion tactic! Yes, their time is valuable, but an executive’s decision to skip the details comes at a cost.

Savvy business leaders know how to interpret estimates. The best ones coach their teams to expect overages – there is no crystal ball for the real world. Ideally, you’d include contingency lines for those unknown-unknowns, but if the bottom line is shown without contingency reflected clearly, the busy exec will be left with assumptions.

Some business leaders push for “not to exceed” contracts to avoid surprises. But imagine the shell game the agency has to play when the funds run out. The team will scramble to figure out how to balance quality with on-time delivery and prevent the project from losing money. There’s no fluffy rabbit to be pulled from that hat!

The winning strategy is to keep it clear and concise. Transparency is best. Show the bottom line, add a contingency allowance, and note the change management process for when the project unexpectedly shifts.

Conclusion

Don’t let the gremlins of project estimation hide behind your assumptions. Kick off with a discovery phase to remove uncertainty, include what’s out of scope, and ensure everyone knows how contingency is being handled. Your SOW should be backed by a change management process because even the best-laid plans can change. And remember, executives are pressed for time, so make it easy for them to review what their team is signing up for!

……

If you are looking for a partner who strives to remove assumptions for the sake of clarity, reach out to your Perficient account manager or use our contact form to begin a conversation.