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How To Create a Project Estimation And Prevent Missed Deadlines And Cost Overruns

Successful software development starts with accurate project estimates. To make sure you achieve objectives within the fixed timeline and budget, it is necessary to foresee the resources and costs needed to execute a project. No matter what size the project is, you need to know your tasks, processes, deliverables, and the team by heart.

Things get challenging when a project goes over the budget or fails to meet deadlines. There might be a million reasons for that, but mostly such cases occur because of imprecise estimates. Projects that overrun budget or deadline entail negative impact on the teams involved and overall organisational reputation as well as additional expenses.

Follow this post to find out how to conduct the project estimation and what pitfalls to avoid in the process.

What Is Project Estimation?

Project estimation is the process of analyzing the data to predict the time-frames, budget, and resources needed to accomplish a project. Generally, project estimation focuses on scope, timeline, budget, and risks. In the best case, estimates are made by teams that include managers, designers, developers, and more. For example, such a system is relevant for large IT companies such as Smart Tek. When it makes sense to attract a variety of specialists to evaluate a project.

Key Components of Project Estimation

Scope

When planning the project, the first stage would be defining the scope of work. Project scope is a detailed outline of all activities, resources, timelines, and deliverables. It focuses on providing a clear understanding of what the project is about, what is included, and what isn’t. Scope encompasses key stakeholders, processes, assumptions, and constraints as well. Accurate estimation covering all elements of the project means you can have a more precise understanding of the cost, timeline, and potential risks.

Time-frame

Having a clear understanding of the scope of work, you can now proceed to clarifying the time it’s going to take to achieve each milestone. Make sure you prioritize tasks and include the factors that might slow things down, like meetings, holidays, interruptions of all sorts, and rejections from Quality Assurance. A proper timeline estimation will show you how much time will be spent to complete different stages, and when each major milestone will be achieved.

Resources

Now it’s time to determine the resources the project needs: staff, vendors, contractors, as well as equipment. After you have settled the team, assign the resources for the tasks in the scope of work and make sure to know their availability and schedule in advance.

Cost

Cost is a vital part that must be agreed at the very beginning of the project as every part involved wants to know the price of the project. Defining final cost implies an understanding of the scope, timeline, and resources needed. With these aspects thought out, you can come up with a rough estimate of the project.

Risks

Finally, the last thing to do when preparing a project estimation is identifying possible bottlenecks. Having identified the risks, you need to prioritize them and determine their probability and effect. This way, you will be able to come up with a strategy to handle them and will not be caught off guard.

What Makes a Great Project Estimate?

Software development project estimation is far from easy. If not done thoroughly, it may result in extending the timelines, blowing your budget, and jeopardizing your relationship with a client. We have prepared several characteristics for you to judge the quality of the project estimate. These are the following:

Accuracy

You only can achieve expected results as long as the estimate is accurate enough to serve you. Project manager’s task is to pick the most accurate estimating techniques available and revise estimates during the whole development process.

Credibility

Before approving the budget, stakeholders or investors want to be sure that estimates are based on established facts or practical experience. Incorporate expert judgement technique or use set values such as unit costs or work rates to increase the trustworthiness of an estimate.

Documentation

Make sure the estimates are not only declared assumptions but are identified and recorded in writing. Thorough documentation prevents misinterpretations and allows stakeholders to understand the numbers they are provided with.

The Most Likely Reasons For Inaccurate Estimates

We enlist several common mistakes that can affect the accuracy of estimates for you to keep in mind.

Human Resources

It often happens that the number of human resources involved in a project increases. Consequently, it complicates the account for costs in organizing people, principally in activities that require managing tasks across many people. Another pitfall is expecting that resources will work at maximum productivity instead of assuming 80% productivity to be prepared for unexpected risks.

Lack of Experience

Accuracy in estimating grows after project teams and companies gain experience working with similar projects. Analogous or Comparative estimating comes in handy when you conduct the estimation similar to the one you have done at a previous project. Hence, lacking the past experience puts you at risk of imprecise estimation results.

Lack of Requirements

An overall idea of what the project is about might not be enough. You should put effort into clarifying each element and thus, stay on the same page with the client and don’t miss out on anyone’s expectations.

Failing to identify risks

Unforeseen risks result in unwanted issues such as raising costs and extending time-frames.

Summing Up

Hopefully, this post about project estimating will walk you through the key concepts and help you omit the pitfalls occurring along the process. In the Software Project Estimation blog post there is more comprehensive information on basic steps, proper timing to conduct the estimation, what techniques are there to ensure the accuracy, as well as the costs of software development.

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