• How-to Guide: Change in Project Management

  May 23, 2013

  
  

• How Much Project Management Is needed in a Federated Organization?

  May 23, 2013

  
  

• Become a Proactive Project Manager

  May 22, 2013

  
  

• Project Management - Communicating Successfully

  May 22, 2013

  
  

• Talk Like a Project Manager

  May 21, 2013

  
  

• How to Project Manage a Pyramid

  May 21, 2013

  
  

• The Art of Project Management: Scale

  May 20, 2013

  
  

• Project Management Foundations - Understanding the Maturity of Your Project Office

  May 20, 2013

  
  

• Why Are Companies “Good” but Very Rarely “Great” at Project Management?

  May 19, 2013

  
  

• Project Management Institute’s 2013 “Pulse of the Profession” Survey

  May 18, 2013

  
  

Project Schedule and Cost Estimating - Part 2

September 19, 2011 | Author: PM Hut | Filed under: Cost Estimating, Scheduling

Project Schedule and Cost Estimating - Part 2
By Martin Webster

In part 1 I explained that the project plan should start with a reasonable understanding of what the project is expected to deliver. Only then will it be possible to decide what resources are needed and the effort and costs to be expected.

The plan will evolve over time, starting with the key business objectives, scope, and key deliverables, and culminating with the summary plan. The initial plan comprises:

• Identification of the key deliverables (or products) and dependencies between these and other projects
• A break down of the project into manageable chunks based on the key deliverables and project stages
• A summary plan or schedule of the entire project
• A detailed plan or schedule of the next stage that also includes costs and resource requirements

Planning occurs (or should occur) like this:

1. Identification of the project’s products – the product breakdown structure.
2. Listing the resources needed to deliver each product.
3. Calculating the effort and costs associated with each product.
4. Setting time-scales for the project.

Project managers need to follow this sequence to produce a reliable project schedule. And they should always resist any pressure – usually from sponsors – to do these things in a different order. So plan in summary for the entire project and in detail for the next stage (I may sound like a stuck record on this point but it is so important – don’t bite off more than you can chew!) Use a staged framework and product-based planning approach to identify all the products the project needs to create.

A little inaccuracy sometimes saves tons of explanation. – Saki

Your estimates should be based on the work scope defined in the product breakdown structure plus any relevant milestone events (also see How to Plan for Your Project More Effectively.) Build your base estimate using a variety of estimating techniques – historical cost data, work distribution or standard products – and summarise using an estimating sheet. Include the total costs for each product you have identified and include the effort needed from internal resources, contract staff, and purchases. Make a note of any assumptions and identify the resource estimator.

When acquiring estimates for people’s time you need to remember two things. First, no one is productive 100% of the time. And second, everyone performs differently. Accordingly, make sure you build non-productive time into your estimates and ask those who prepare estimates to base their calculations on the performance of those who are most likely to do the work.

The accuracy of your estimates is likely to change as you progress through each stage of the project. During the early stages you will work with soft estimates. Consequently, it’s a good idea to include an estimate of what you know is likely but cannot explicitly define at the time. This is the scope reserve and is usually set as a percentage of the base estimate.

Once you start planning in detail for the next stage you will gain greater confidence in the estimates and the proportion of scope reserve will decrease as the project proceeds. However, do not confuse scope reserve with contingency. Contingency is included in the estimate to take account of risk – the unexpected – not errors or uncertainties from estimating.

Regardless of how you derive your estimates make sure you use the estimating sheet to record any constraints, assumptions or qualifications. And feed these back into the business case at the earliest opportunity!

Martin Webster is Systems Support Manager at Leicestershire County Council. He has over ten years project and programme management experience. Martin’s professional interests include project management, leadership, and strategic information systems planning. Read more at Martin Webster, Esq.

This entry was posted on Monday, September 19th, 2011 and is filed under Cost Estimating, Scheduling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

feel free to leave a comment

Comment Guidelines: Basic XHTML is allowed (a href, strong, em, code). All line breaks and paragraphs are automatically generated. Off-topic or inappropriate comments will be edited or deleted. Email addresses will never be published. Keep it PG-13 people!

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

All fields marked with " * " are required.

Name: *
Email (will never be displayed): *
URL:
Your comments: *
Remember my information for the next time I visit.

• Agile Project Management
• Ask the Hut
• Certification
  • CAPM
  • ITIL
  • PgMP
  • PMP
• Change Management
• Communications Management
  • Communications Planning
  • Information Distribution
  • Performance Reporting
  • Project Closure
• Computer Based Information Systems
  • Latest Trends
  • Project Collaboration
• Concepts
  • Project Lifecycle Phases
  • Project Stakeholder Management
  • Role of the Project Manager
• Corporate Transformation
• Cost Management
  • Cost Estimating
  • Economic Evaluation
• Critical Chain Project Management
• Delegation
• History
• HR Management
  • Organizational Structures
  • Team Building
• Implementing Project Management
  • PM Implementation Plan
• Integration Management
  • Change Control
  • Project Management Framework
  • Project Plan Development
• Lessons Learned
• Management
• Miscellaneous
• People Issues
  • Conflict Management
  • Leadership
  • Motivation
• PMBOK
• PRINCE2
• Procurement Management
  • Contract Administration & Close-out
  • Procurement Plannning
  • Solicitation & Source Selection
• Program Management
• Project Lifecycle Phases
• Project Management Advantages
• Project Management Advantages
• Project Management as a Career
• Project Management Best Practices
• Project Management Charts
• Project Management Definitions
• Project Management Ethics
• Project Management for Beginners
• Project Management Guides
• Project Management Musings
• Project Management Office
• Project Management Proposals
• Project Management Templates
• Project Portfolio Management
• Project Workforce Management
• Quality Management
  • Principles
  • Techniques
• Requirements Management
• Risk Management
  • Risk Identification
  • Risk Quantification & Analysis
  • Risk Response & Control
• Scheduling
  • Normal and Crash Costs
  • Project Plan Refinement
  • Resource Constrained Projects
  • Resource Leveling
• Scope Management
  • Process of Change Control
  • Project Scope Management
  • Scope Change Control
• SCRUM
• Soft Management
• Time Management
  • Activity Definition
  • Activity Duration Estimate
  • Activity Sequencing
  • Critical Path
  • Network Planning
  • Project Milestones
• Training
• Uncategorized