Regardless of how big or small, determining project estimates for costs, resources, and time needed is really hard.
The worst part is, it’s hard to know exactly how a project will pan out. Consider all of the unexpected hiccups that often happen like team members falling sick and budgets get slashed.
Project estimates can’t just be pulled from the top of your head. They're complex because, well, your projects are often intricate too.
The PMI Pulse of the Profession report found 78% of respondents believe their projects for the year would be deemed medium or high levels of complexity.
Whether your projects are getting more challenging or not, you need to appropriately estimate the world that needs to be done to achieve the most success. That's why you're here, right?
So let's help you out with our guide on how to determine project estimates more accurately than you've ever done before.
What is a project estimate?
A project estimate is an estimation of the time, cost, and resources needed to complete a project. By analyzing the data available and using information imparted by the client, you predict how much a project will cost, how long it will take, and what tasks will be involved to complete.
For most successful project managers, it's all about ensuring project estimation includes project scope, time-frames, potential milestones, budget, and risks. To create an accurate project estimation, it’s crucial that you have an in-depth understanding of your team, their availability, project deliverables, stakeholder expectations, tasks, and budget.
On top of this, project estimates also require deep insight from stakeholders--what are their expectations? What does a successful project look like to them? What is their best-case scenario budget and their worst-case?
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Project estimate techniques: Why you might need them
Project estimates keep everyone on the same page. Imagine having no idea of budget, going way overboard, and causing a rift with stakeholders.
Or consider how easy it is to assume you have the correct resources available – only to find out you don't when it's crunch time. Data from Scrum Inc found 47% of agile projects run into deadline issues, budget problems, or result in unhappy clients.
Obviously, you can’t just pull numbers and tasks from thin air, which is where project estimate techniques come into play. For project managers, using a project estimate technique can help you:
Accurately estimate the elements of a project
Provide better forecasts to stakeholders
Create tighter budgets
Plan a project from start to finish
Quickly provide robust numbers to clients
Assign the right people to the right tasks
Ensure you have the materials and tools available
When do project estimates come into play?
In the traditional waterfall methodology, the estimate stage comes immediately after project initiation. At this point, you’ll draw up your estimates and document them for stakeholders to access.
You can be fairly flexible in this methodology–estimates can be adjusted during the project when you uncover new risks or stakeholders require extra deliverables.
If you’re using the agile methodology, project estimates are more fluid. Agile frameworks tend to segment projects into sprints.
Estimates are planned out at the start of sprints but are also tweaked during each one. For most projects that fall under the agile methodology, estimation happens during the retrospective as well as the sprint planning session.
How to figure out the project budget
The project budget will limit what you’re able to do. If you run out of funds partway through the project, you won’t be able to produce the required deliverables which will have a knock-on effect for the rest of the project.
The same PMI report found only 57% of respondents could stay within their initial project budget to see it through completion. That nearly equates to almost half of projects aren't completed within budget.
And as you probably know, clients often want a lot for little cost. Setting cost estimates at the very start will help manage client expectations and ensure you have the funds needed to complete the project successfully.
Estimating the budget involves assessing how much money you’ll need across the entire project, but also when you’ll need the funds. Get better estimates by following these tips:
Get a budget range from clients or stakeholders for best-case and worst-case scenarios
Map out the individual parts of the project and split them into tasks or milestones
Identify the resources and tools you’ll need to complete each task
Assign costs to each of the tasks, taking the resources, tools, and other expenses into account
Create an overall cost estimate by totting up the costs of each individual task
If you’re completely stuck, use the data from a recent or similar project to figure out what each task might cost. Then you can assess any potential risks where the budget could be impacted.
2. Understand the full project timeline
Timelines are crucial for getting a project completed. Stakeholders will likely have a timeframe in their head, but it's up to you, the team lead, to extract that information and determine whether it’s doable.
And sometimes it’s not, but that’s okay. The project timeline is all about expectation setting and setting unrealistic deadlines is not good for your team or your clients.
Estimating the overall duration of a project and when each individual task will wrap up is a vital part of project planning. Luckily, Teamwork has an amazing reporting feature to ensure your projects stay on course from the original due dates.
The Teamwork Planned vs. Actual Milestones Report provides you with a breakdown of the actual status of your project milestones. This report compares your original due dates with your current or complete dates to help you identify how your project is going against your plan.
Additionally, Teamwork gives you the option to use various project management methodologies, like the highly visual Gantt Charts. The drag and drop features make it easy to visually determine project timelines in order so you know everything needing to be completed.
Map out each individual task that needs to be completed and identify the resources, tools, and team members you need and when they are available.
3. Document the full project scope
Your project scope refers to all the work that must be done to complete a project. Whereas the project timeline estimates how long a project will take (including how long each task will take).
However, the scope estimates what those tasks actually involve. This will be one of the first estimates you create, since understanding the tasks involved fuels both the budget and the project timeline.
Estimating the scope of a project also ensures you have the right materials and resources available at the right time. The last thing you want is to plan a design sprint when your designer is on holiday.
To plan your tasks, try our free project scope template and ensure everyone is accountable and aware of what's needed in your project. This will help you Identify the end deliverables while breaking down each deliverable into smaller steps.
Then you can map out the tasks involved in each of those steps and check that you have the resources and materials available for each task.
Maintaining all sides of the Iron Triangle
Project budget, timeline, and scope are three elements of project estimates often known as the three sides of a triangle in the Iron Triangle.
To estimate a project’s budget, you need to know the scope and timeline and vice versa. If one side of the triangle changes, it will inevitably impact the other two sides.
While each element can be estimated in isolation, you’ll get a far more accurate estimate if you work with them all together.
4. Realizing the project risk
It’s rare that a project runs completely smoothly from start to finish. An integral team member might fall sick, a deliverable might not have the desired reaction from a stakeholder, or the budget might change halfway through.
Preparing for all eventualities will help you provide a more accurate estimate and keep stakeholders’ expectations in check.
Try to map out all the tasks involved in a project and identify potential risks for each task and how they might impact the overall project. Then you can appropriately create a risk management plan that highlights what you'll do if anything of the document risks were to happen.
And within Teamwork, you can easily add a Risk to each task to make sure the problems are documented. It's simple to sort through the risks and find information faster, so you prevent them from turning into project failures.
5. Know your available project resources
Projects simply can’t be completed if the right resources aren’t available. When we say resources here, we mean the assets you need to finish a project.
It can refer to tools, team members, materials, software, and subcontractors. Essentially, any “thing” you need to carry out the required tasks should be deemed a resource.
Estimating the resources you need will help you determine when you need these resources to be available, how much it will cost to use them, and create better resource management overall.
Teamwork makes this simple by helping you map out every task involved in the project and adding the necessary information or stakeholders to complete it.
You can check the availability of your team members and understand the cost of the required resources with billable hour time tracking. Maybe detailing project estimates doesn't have to be so hard after all when you have the best tools in hand.
Estimate projects with a project management tool
Manually configuring project estimates can be a drag. This is especially true if it’s something you regularly do. With the help of a project management solution, you can streamline the process and create increasingly accurate estimates.
In the Teamwork dashboard, set up and estimate a potential project with lists to help you break down the structure of a project, moveable cards that refer to each task involved, and a time tracking tool to help you monitor time spent on each deliverable.
You can also create estimated timelines, assign resources, and schedule team members to work on specific tasks. Bring everything together and track whether your projects tend to remain on track or whether they often slip off the rails.