Estimating the Accuracy and Precision of Your Project Estimation

Estimating the Accuracy and Precision of Your Project Estimation

Most projects are built on guesses and not on concrete, well-informed estimates. These guesses are often close to accurate, but they can lead to long-term deviations from estimates. Certain organizational standards are established to reduce estimate deviations and bring them closer to the desired accuracy levels. It is important that you have all the information necessary to manage a project and can be analytical in estimating pricing and scheduling. It is important to mention that planning is an iterative process and needs to be revised as the work progresses. For more information on how to estimate the accuracy of your project estimation tools and tactics, please read the following.
Scope of the Project
Clear and transparent insight must be provided into the scope and nature of the project. Focus on the actual work and avoid any unneeded tasks, especially those that don’t add value to your efforts. It is essential that you, along with other stakeholders, agree on the scope of the project. Then, you need to create estimates accordingly.
Resources and Skill Sets
The project cost estimates are based on the skills and resources required to complete the project. These inputs can be unpredictable and dynamic so it is important to pay attention to the initial estimates and make adjustments as necessary.
Project Risks
Project managers often include all risks associated with costs, such as management reserves and contingencies, in their estimates. Contingencies are designed to cover expected financial risks. Management reserves are used to handle unexpected risks such as natural calamities. For any project to have an estimated budget, it is necessary to determine all direct and indirect risks.
Volume of workload
You must reduce the total amount of work you have to assign to each stage and to different members of the project in order to make use of all resources. Once the work is completed, you can use it to make more precise estimates.
Work Schedule
Clear work schedules are essential for the proper allocation, implementation, completion, and completion. You will soon be able to make accurate estimates if you have a good understanding of the dates and volume of work required.
Tools for more accurate project estimates
Analogous Estimating
This type of estimating uses historical data from the organization’s database (or project archive data). Although it can be inaccurate in certain cases, analogous estimation refers only to past experience with similar projects using the same set of resources.
Parametric Estimating
This tool uses historical data, augmented by statistical calculations. Although it is more accurate than similar estimating, it takes more time.
Heuristic Estimating
Project managers and SMEs can estimate different phases of a project based on their expertise and experience. It is possible to estimate that construction costs will account for 36 percent of total project costs.
Bottom-up Estimating
This estimation type is based on a WBS (Work Breakdown Structure), and requires the addition of all lower levels of WBS (Work Package) costs.