Project Estimation is an underrated skill that has not been talked about much. Despite 35,00,00,000 search results for the query as we speak, project estimation still remains a topic that needs education.
If you're an aspiring Product Manager, you need to be proficient in project estimation. We’ve put together this blog post which will throw light on the meaning of project estimation, benefits of project estimation, its types and other bonus topics.
It includes 6 key components which also prove to be its benefits. Learn more about it as we explain each of them below.
1. Cost: The budget is the primary aspect that the planning of a project begins with. For accurate prediction of the cost, you need to assess the scope, timeline, and resources. When this is clear, your rough estimate of the project is ready.
The foundation for your estimation can come from your previous projects. If you don’t have historical data, seek help from people who have undertaken projects of similar scale.
2. Scope: Project Scope refers to documenting your project where you will define goals, deadlines, and project deliverables. If your project scope has clarity, you will achieve all your goals and deliverables on time.
Other critical information such as processes, stakeholders, assumptions, and challenges are addressed. The project statement of work (SoW) mentions all the details including SDLC, core meetings, and status updates.
You can get a concrete understanding of the cost, duration, and possible problems if you estimate the scope accurately.
3. Time: Time is another important factor you need to consider when estimating a project. When the project scope is clearly defined, estimating the time required to complete every milestone gets easier. The time frame should be long enough for management and supervision.
High-priority tasks should be allocated more time than others. You need to consider other factors like meetings, holidays, disturbances, and QA failures.
Estimating your project schedule allows you to accurately define the deliverables and meet client expectations.
4. Risks: Project Risks are inevitable events that could derail your project. Estimating the risks and the magnitude of damage they can cause can help you come up with strategies to mitigate their damage.
You can prioritize and develop risk management plans so that projects can progress without major interruptions.
5. Resources: Resources are assets that one needs to get the job done. Resources are limited and often get exhausted if there is no right planning. It includes materials, tools, software, labor, subcontractors, and the like.
Resource Management helps you confirm all the resources you require are available and can be used efficiently as possible.
6. Quality: Quality is an indispensable aspect that can’t be compromised. Products have to undergo quality tests and meet certain regulations. Estimating quality helps you critically evaluate the other five aspects of project estimation.
All the six aspects are interconnected and estimations for one aspect have a bearing on the other five aspects, so it is recommended to use one project estimation technique for evaluating all the six aspects.
This method is best suited for single-owner businesses with limited resources. However, this method is based on guesses and has less scope for changes in the budget.
The Bottom-Up method fares better in comparison to the Top-Down estimate since it is more accurate but is more time-consuming.
This method helps in monitoring the project timeline and budget. The downsides include it is time-intensive and requires a large amount of resources. The project has been elaborated on each step and there is a high chance of cost overestimation.
It provides a rough estimate but may not be always accurate since data can be subject to changes due to time and inflation. Two projects can be similar but not identical which can result in errors.
This method gives accurate estimates and is flexible to accommodate changes in the budget. Despite its many pros, it is not ideal for digital projects as it can lead to price disparity.
This technique gives accurate estimations and thereby minimizes the risks. It is time-consuming and is complicated to learn.
Agile projects take an iterative approach and projects are divided into sprints. Estimation can be done during sprint planning or during sprint retrospectives.
The accuracy of the estimates is dependent on the team's efforts so the involvement of the subject matter experts can help deliver precise estimates.
Any good project estimation tool can refine data by recording, making changes, and correcting errors to improve future project estimates. It also helps in sharing project estimates with stakeholders without hassles.
Knowing when to estimate and whose responsibility it is, can make project estimation transparent and accurate.