Estimating Guidelines

When to estimate, and who estimates
Developing Estimates
Some Rules of Thumb
Estimating techniques and definitions

1 When to estimate, and who estimates

Estimates are essential both to ensure that finance can be reserved for the project, but also so that the project manager has a baseline to control the project against.

Estimates will be revised throughout the duration of a project, but there are two main points where estimates are developed.

During the drafting of the Project Brief an initial rough estimate of the effort required to complete the project should be produced. This will help to assess whether the project is viable.
After the project brief has been signed off, more detailed estimates for the Project Plan.

Before the start of each major piece of work, review the estimates in the light of experience and to reflect changes in what is to be delivered.

The following general principles may help:

Wherever possible, get more than one person to do the estimating, and include the people who will be doing the work.
Do not rely on just one estimating technique.
Capture actual data, compare the data with original estimates, and feed this into the estimating process.
Document all assumptions that have been made in support of the estimating process.
Describe estimates with a tolerance to indicate the level of confidence (e.g. + or - 20%).
Estimates should cover all requirements.

2 Developing Estimates

First, ensure you know what is involved in the project - in particular what work will be involved. This information can be found in the project brief and project plan.

Next, consider what resources you will need. Take into account the scope and complexity of the project and the range of skills that will be needed. If it helps, break the tasks down into smaller tasks.

Then, establish what can be resourced internally, and what will need to be resourced by people with specialist skills, possibly including bought-in resource.

The final step involves estimating how much effort (i.e. the number of person-days of work) will be involved to complete specific project tasks and activities.

3 Some Rules of Thumb

On scheduling:

Use a 20-day month for effort scheduling
Use a 7-hour day for effort scheduling
Assume that a member of staff is 80% effective during his or her working day
Account for the fact that staff do not work on public holidays or privilege days
Assume that staff are not available between Christmas and New Year public holidays
A minimum allowance of 10% contingency should be applied to costs and timescales of projects, with a higher figure applied to more complex projects. Any variable over the 10% figure in respect of more complex projects should be agreed with the project manager’s line manager.

Don't under-estimate the following:

effort for reviews, walkthroughs and start-up activities
testing activities
the support required from the project team
the time it takes to procure external services
time required for meetings and travel (especially for split location projects)
management effort
review time.

Don't ignore or neglect:

induction time and activities for new staff
user effort
training activities
Resource costs in terms of internal and external staff
Resource costs in terms of materials, i.e. consumables

Make an initial estimates and then adjust to take account of:

Quality of previous estimates
Team size and experience
Accommodation available
Tools available
Level of user involvement
Identified major project risks

Think about Contingency

Contingency is additional effort/cost added to a project to deal with both risk and estimating inaccuracy. For most projects, the contingency should be:

Matched to the magnitude of the uncertainty or risk in the estimate figures
Added only once to an activity
Agreed with the project sponsor
An actual number, not a percentage (although it can be calculated using a percentage)
Calculated separately for each activity
Appropriate to each activity or grouping
Revised as the project progresses

4 Estimating techniques and definitions

Bottom-Up Estimating

Bottom-Up Estimating involves estimating the effort involved to complete all the tasks and activities for the project, then adding it up to produce an overall value. This provides more realistic, detailed estimates than does a top-down approach.

Both top-down (see below) and bottom-up estimates can both be used for the same project. Using different estimating techniques will result in several estimates for the same activities. Comparing the estimates and understanding how the estimates were developed provides the best way to arrive at a final estimate for all activities.

Consensus Method (also known as the Delphi method)

The idea behind the consensus-based approach is to get a small group of people that are involved in an activity to estimate the effort required for that activity. There will be a range of estimates produced based on the different viewpoints, level of interest, and experience of the people in the group.

The group are asked to produce estimates independently and then to explain the reasoning behind the estimates. The estimates can be discussed in the light of these explanations, and gradually, a single figure for the estimate can be agreed.

This discussion is best done in a workshop.

Expert Judgement

Individuals with expertise in particular areas are consulted for estimates. The Consensus Method can then be used to gain consensus where more than one expert is involved.

Historical Comparison

Effort for a project as a whole can be estimated by direct comparison with actual effort for similar past projects. This technique is probably most applicable for smaller follow-on type projects, where the staff involved and system characteristics are almost identical.
Estimate = Past project actual effort x (Current Project Size/Past Project Size)