If you make mistakes during the project estimation phase, you are simply setting your team up for failure. A lot of project managers are guilty of overpromising because they agree to work to timescales that are unrealistic or they get the price wrong.
When you do this, it simply starts off a chain of problems because you have not set the correct parameters for the project to begin with. So, with that being said, read on to discover more about some of the most common project estimation mistakes so that you can avoid making them going forward.
Misapplying contingency and risk
Unfortunately, we have to start on a downer, and this is by addressing the risks that are associated with a project. A good estimation will evaluate the level of risk associated with a project. In a tender scenario, this is determined by a number of different factors, including whether the price has to be fixed, third-party involvement, client maturity, and governance. The greater the contingency will need to be the higher the risk. However, this is where a lot of project managers and busines owners go wrong, they do not consider risk when determining an estimate, or they do not recognise the correct risk level. Either way, if you do this, your estimate will not have the correct contingency factor applied, and you may not win the work or you could lose a good chunk of money if you are accepted.
Overlooking the importance of software
There is no need to do your estimates and quotations manually when there is software available that can do this quicker and better. Look for software that is bespoke to your industry, such as electrical estimating software. By doing this, you can be sure that all of the elements of the job are considered so that you come up with the most accurate quotes. Not only can this software assist in terms of producing the estimates you need, but it will also help you to stay on top of data storage so you can easily go back to a quote whenever you need to in the future.
Confusing targets and estimates
Estimates and targets are not the same thingss. However, they often get clouded and confused. You should never base your client commitments on expectations; they should always be formed on the basis of estimates. If you do the former, you are going to set your team up for failure.
Ignoring the things you cannot change
Just because you cannot change something does not mean that it should be ignored. Projects are always going to have a mix of fixed and variable activities. For example, there are usually legislations and safety requirements in place, which can mean that certain jobs can only be carried out to a level before you reach a threshold that cannot be breached. Do not assume that the client is going to be aware of this. You need to let them know, and you need to include this in your estimate.
Unbalanced resources across the schedule of the project
Last but not least, we have unbalanced resources, which can be a big problem in terms of getting project estimates correct. Estimates usually come from an experientially derived effort standard that is known for the activities you are going to be carrying out. This will then be assigned to the relevant competency, which is then converted into FTEs, or full-time equivalents in full. The problem with this is that while it gives a rough understanding of the resources, it does not account for the optimal use of them, and so the estimation can be off. To ensure client satisfaction and optimal productivity, you need to right-size the team from the very beginning.
Hopefully, you now have a better understanding regarding some of the most common errors that business owners and project managers make when it comes to project estimations. It is easy to make errors in this regard, especially when you want to impress a client. Nevertheless, it is critical that you get your estimations right because the last thing you want to do is set your team up for failure by agreeing to something that simply is not feasible. Are there any project estimation or time-tracking tools that you find useful?