Project Cost Estimation: what does it mean? How does it affect the organization? What should project managers take into account to create accurate and realistic project estimation? I’ll try to answer all above-mentioned issues and provide a couple of tips that should help improve estimating of projects, reduce risks, and significantly increase web project success.
Project Manager and the Cost
Success in any kind of organization depends significantly on the providing of customized solutions, proposed by its staff. Now, more than half of the web projects exceed their deadlines and budgets by more than 50%. The reason is that most of the project managers can’t provide an accurate Project Cost Estimation. And that's true, PMs can't know the final project cost until the project is completed because they can't predict the future.
Very often PMs under estimate the time needed for projects’ implementation. It happens when the project manager isn't aware of the tasks that should be done or there is an essential lack of information from the customer. Unexpected events or unscheduled high-priority tasks may also not be taken into account.
A good project estimation gives to the customer all information that relates to the proposed project strategy, without keeping anything hidden. If there's some misunderstanding in cost value, it's better to discuss this issue immediately rather than to do it after several months, when the project is almost completed.
Tips for optimizing Project Cost Estimation
There are few simple tips below on how to create the most realistic project estimation:
1) Create an "actual hours" database (or calendar) using the recorded time spent on each part of your project. This information will help you estimate your future projects and will make the estimation more realistic.
2) Don’t forget to use the appropriate documentation (project plans, databases, charts etc.)
3) Use more than one project estimation techniques to make an estimation, and look for a midpoint among all of them.
4) Use the experience of your colleagues as well as your own.
5) Get a professional’s view.
6) Time management should be included in any project estimation.
7) Organize different problem-solving meetings and other events for your colleagues to get the most realistic project estimation.
If you need to estimate a long-term web project, it is better to divide it into several small short-term tasks, rather than trying to make the estimation of the whole project.
8) Agree with your client that all additional works that are not defined yet before starting the general cost estimation of the project.
If the proposed budget of the project makes it impossible to do the work in accordance with the client's requirements, you should propose your client adjust one or more of the following project criteria: cost, timing, quality, and functionality.
In the end, I would like to say, that the use of multiple active project estimating techniques will help you improve significantly your estimation practices and avoid risks in the future, but like Mike Harding Roberts says: "The same work under the same conditions will be estimated differently by ten different estimators, or by one estimator at ten different times"
See also: Effective Management with Coaching