Project Estimation Techniques
In this Topic, we are going to learn about Project Estimation Techniques because every field today, in the service sector, has become very competitive. On top of everything, the service sector is completely project-driven. One has to be not just skilled but very competitive to get a project, and if one does not then, he/she has to be a part of the bench-strength and also stands a high chance of losing his/her job. As project forms an important aspect of job nowadays, project management is of utmost importance. It is not just a skill set but also a practice.
Project management is the practice of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria at the specified time. The requirement in project management is an estimation. In simple terms, estimation is the process of approximation. It involves finding out an approximate value with all the available inputs. One has to estimate the money, time, effort, resources, and scope needed to implement a project successfully based on past data, knowledge, assumptions, and risk involved.
Techniques Used to Estimate a Project
There are different methodologies/techniques used to estimate a project which are as follows:
1. Understanding of Project
The first thing needed to be done when offered a project is understanding the project. One has to understand every nuance of the given project in order to estimate it and implement it properly. What is the project? Why is it being implemented? What are its advantages and disadvantages? Etc. This gives us an idea regarding the overall picture, and one can plan his/her work schedule accordingly. One can give his/her viewpoints on the implementation and improvisation of the project too.
2. Expert Judgement
It is not just the most common and necessary but also the most crucial way of getting the project initiated. Discussing the project with people who have had prior experience on a similar project helps us decide how would we like to start a given project and what are the basic requirements to get it initiated. It also helps us in estimation by giving us a vague idea of the kind of project, its time, scope, budget, etc. Experienced personals also act like people who can show us the direction that can be followed for efficient implementation of the project and the mistakes that can be avoided.
3. Three-Point Estimation
The three-point project estimation technique is a mathematical technique for determining an approximate probability distribution representing the ultimate outcome based on limited and restrictive information. Normal distribution and triangular distribution can be used for this estimation. This is commonly called the PERT (Program Evaluation and Review Technique).
4. What-If Analysis
This technique uses assumptions regarding various factors like scope, time, cost, resources, etc., to evaluate all the likely outcomes. Generally, the project estimate is done by working together with all the members involved in numerous workshops. E.g., Expert Judgement can prove useful if one decides to undertake this process. The entire activity is broken down into smaller chunks or work packages; each work package is estimated on the basis of effort, duration, and cost.
The following activities are done during the workshop:
- Break down the scope into the smallest work package.
- Arrange the activities in chronological order in which they will be performed.
- Identify the effort required to complete each activity.
- Estimate the resources needed to complete each activity.
- Identify the dependencies to complete each activity.
- Consider the risks and assumptions involved.
- Explain the resource and cost estimate to complete each activity, component and work package.
- The above exercise helps in precise project estimation and creates a work schedule taking into use cost, scope, resources, efforts, etc.
This is not a detailed analysis. It just takes knowledge of previous similar projects, including cost, resources, efforts, etc., and its scope to put this methodology into use. It is useful when the size of the project is huge and gives us a nebulous overall picture of the given project. The top-down approach involves starting with the project goal or final objective and breaking it down into smaller chunks or work packages. Each of these work packages is further analyzed in greater detail, and then work items are assigned to team members.
Unlike the Top-Down method, this methodology is a detailed analysis of the concerned project. It is, therefore, used for projects that require a lot of commitment. Bottom-up estimating is a way to ascertain a total value by ascertaining values for smaller chunks or work packages and using the sum of these values as the total value. In project management, this methodology/technique is used to create a schedule or budget. The schedule is determined by totaling the individual duration estimates, while the budget is determined by summing up the individual cost estimates.
7. Parametric Model Estimate
This technique uses independent variables from the project work. This technique gives more accuracy in project estimation as it is scientific in nature. Parametric estimating is a technique for estimating cost and duration. Essentially, a parametric estimate is determined by identifying the unit cost or duration and the number of units required for the project or activity. In order for parametric models to have any validity, they must be based on or proven using actual project data. It is difficult to use as it requires concrete and robust data and is generally tough to adjust to the working environment.
8. Comparative or Analogous Estimation
These Project Estimation Techniques are used when a project is initiated with the help of references to prior similar projects, and thus, the correlation among projects is high. Expert judgment and historical information play a prominent role in this case. Project estimation is a useful and essential skill as it not only helps in getting the bigger picture of the given project but also makes the work schedule more realistic because important issues are discovered earlier with sufficient time in hand to resolve them. These Project Estimation Techniques /methodologies make estimation simpler and more accurate, which is highly beneficial in the long run.
This has been a guide to Project Estimation Techniques. Here we discussed the top Project Estimation Techniques to make estimation simpler and more accurate. You can also go through our other suggested articles to learn more –