Basic estimation techniques
Abstract
When managing a project, a manager has to achieve specific objects within time, resources and money. This can often be challenging, as there is a lot of uncertainty in doing so. "How can the amount of time for each activity be calculated"? "How many resources are needed to complete every task"? "And how much will the project cost in the end"? This article deals with answering all these questions and focuses on how to come up with educated guesses to these uncertainties.
In the first section, a definition of what an estimation is will be given. A variety of standard tools used in the estimation process will then be presented. Some of these tools and techniques are more complex than others and will therefore require a more detailed explanation. For every presented technique, advantages and disadvantages, as well as examples on how to apply these, will be given in order to give the reader an understanding of how the methods works and what they can be used for.
Lastly, the challenges and limitations of using these tools will be discussed, as these can variate in accuracy depending on the size and the type of the projects. The involved risks when estimating will also be covered here.
Contents |
Definition and techniques for estimating
The process of estimating is a common practice within Project Management of predicting a specific value that is not known with a relative accuracy. An estimation can serve different purposes, for example give an indication of the duration for a specific activity, or the amount of resources that must be assigned to a task in order to be completed in time. The process of estimating can be represented as an input/output model.[1] Estimation are based on different inputs. These can be components from the project management plan as the scope baseline; project documents, for example list of activities, assumptions log, resource requirements, register for learned lessons; enterprise environmental factors as market conditions, organizational culture, resource availability; and organizational process assets as policies, scheduling methods and historical data from similar projects. The result of the estimation process, the output, are of course the calculated estimates and the detailed documentation that supports the approximation. Furthermore, as a result of carrying out the estimation process, some project documents may also be updated.
There exist different estimation techniques. It is important to mention that these techniques are not only limited to the planning phase but can be used throughout the whole project . This chapter will describe some of the most used techniques in managing projects and give examples of their application.
Expert judgment
This technique is quite simple and consists in obtaining the judgment of a group or a person with specialized education, knowledge, skill, experience, or training, in the activity being performed. These experts can either be provided in the corporation, or externally, for example by turning to a professional consulting agency. An example of carrying this method out could be by having a group of experts to estimate how much the price for a specific construction material will fluctuate in the next five years. The group will have an open discussion and will at the end of agree on what they believe to be the most valid prediction. The problem with doing so, is that there could a tendency to be persuaded by the majority opinion or the members with greatest authority on the matter.[2]
A well-known method to overcome these issue, is the Delphi method. According to Helmer (1967),Cite error: Closing </ref> missing for <ref> tag
