Best Project Estimation Techniques

Being a Project Manager is pride but, at the same time, a hectic job. A Project Manager is the one who has total command over a project and is responsible for taking every major decision for the project. Out of all difficulties a Project Manager faces, the most prominent one is estimating or budgeting a particular project.

Project estimation is a risky job as the wrong step in the estimate can cause serious damage to the project. That is why making an estimate should be done with sincerity and proper measures of all risks involved. Every Project Manager must consider the time it’s going to take to be completed, resources required for the project, risks that might cause delay, the basic cost of the project, and lastly, the scope of the project before jumping into its estimation.

Numerous project estimation techniques have proved to provide precise estimation to different kinds of projects.
 

5 Magnificent Project Estimation Techniques for Your Next Project

Top-Down Estimation Technique
 

The first in the list is the most common yet successful estimation technique used by professional Project Managers. A top-down estimation is started with a broader picture of the project where the manager breaks it down into smaller details for creating an estimate out of it. The comprehensive view of the project means the scope and expected results from the project.

When the scope and results are decided, then the Project Manager breaks down the amount of work, cost, and time that will be needed to complete this project, for this project estimate to work in the perfect manner, it should be done at the earliest stage of the project and in projects where many unknowns are working for that project.

The top-down estimation can be very helpful in projecting the end result of the project for the people working for it to make them understand what is expected of them in what amount of time period. Through this technique, a pitch for a third-party investor or stakeholder can be made to invest in the project.

Investors or stakeholders are usually interested in seeing the broader picture of the project and least bothered by how that project is being executed but want the promised result at the end of the project. This particular project estimation technique gives a decent amount of liberty of the estimation, turning out to be more or less precise with a small difference. This is the reason why the top-down estimation technique is widely used as it is less risky and offers significant leverage to the team and Project Manager.
 

Bottom-Up Estimation Technique
 

This one is the total opposite of the first technique top-down. Here, the estimate is made with all the smaller needs and details of the project to give it a proper shape. The bottom-up estimation technique is used when there is no broader picture of the project, and its creation lies in the small details of the project, which builds the whole project.

The estimation through this technique can be started by making a list of small details and requirements of the project. When the list is ready, the team which is supposed to be working on the project should be called to provide the estimate of those small details. With the estimate of each and every small detail of that project, a precise and overall estimate of the whole project can easily be pulled out.

The bottom-up technique works great in forecasting the total cost of the budget. The most important benefit of this technique is that as a Project Manager, you get to understand each small element of the project in a more detailed manner. The Project Manager will also gain knowledge about how much each element of that project estimates at the root level.

With so much to do, this technique needs a good amount of time to estimate the whole project. It involves creating the list of small details of the project, getting the estimate of each detail or element, and finally calculating all of them together in one whole project.
 

Analogous Estimation Technique
 

Project Managers with experience in the number of projects under their belt have the best use of this technique. Experienced Project Managers always have past executed projects where they have already estimated the number of projects in the past. Analogous estimation technique is related to the past experience of Project Managers with estimation.

This one is the easiest one of them all. In this technique, a Project Manager is supposed to draw an estimate of the project with his earlier estimates of similar projects. With the help of any previous similar project’s timeline, cost, the scope of work, and required resources, a precise estimate can be made for the new project. It comes very handy as every information and details of similar projects are easily accessible for you.

You can just make a few adjustments in the estimate with respect to the current scenario in which the project is being started and how things have changed since the project of reference. Another crucial benefit of this technique is that you have an advantageous experience of things which didn’t go well the last time or the reason why things weren’t on track, so this time you can know about it already.

So you can do a better job at this time and produce a great piece of work for a successful and precisely estimated project. This particular estimation technique has been proved vital for professional Project Managers, and it has helped them save a lot of time. As most of the information is already available, a Project Manager just has to make adjustments to that data with current scenarios in mind.
 

The Three-Point Estimation Technique
 

This particular project estimation has a mathematical approach for producing the estimate of the project. Some certain values and data need to be put into an equation to get the result as the estimation of that project. The three-point estimation technique helps in creating a probability of distribution with three expected outcomes from the given information, data, or values to the equation.

In this particular technique as well, there is a role of past experiences in project estimation. A Project Manager with enough project estimation experience can only work with this technique and can bring out an estimation for the new project. This technique does not provide a precise estimate but gives a range of estimates through the best guesses made by the Project Manager with his earlier experience in project estimation.
 

It involves three guesses from the Project Manager, which are mentioned below
 

• a = best-case estimate
• b = worst-case estimate
• m = most probable estimate
   

With the data of a, b, and m through the guesses made by the Project Manager, it can be put into the below-given equation.
 

E = (a+4m+b)/6

With the data or values provided to this equation, a Project Manager is likely to get an accurate estimate for the project. The best part about this technique is that there is no information taken or given by a third person like a teammate who might not give accurate information in order to have more time and cost for the project.
 

The Parametric Estimation Technique
 

Out of all the project estimation techniques, the parametric estimation technique has the most concrete way of deciding an estimate. Be it the cost, timeline, or the resources required for the project, and parametric estimation gives a more accurate estimation than any other estimation technique because of the way it is calculated. In this technique, the timescale and cost of a single element of the project are used to determine the whole project’s estimate.

For example, if it’s about constructing a building in a 2000 sq. ft. area. Then the time and cost of building one sq. ft. area will be estimated. The resulted estimate of 1 sq. ft. of that building will be multiplied 2000 times to get the estimate of the whole construction process.

One thing which needs to be kept in mind while using this technique, one should always consider 10% of the estimate being in plus or minus of the whole project. So it is suggested to leave the 10% plus or minus margin on both the single unit estimate and the whole project estimate.

Being this precise, the parametric estimation technique needs to be executed by taking a few things into account. One should always consider the economies of scale, risk factors, and resource constraints. With proper consideration of these three factors, the parametric estimation is the most accurate to execute.
 

Final Words
 

Project estimation is a crucial part of any project, and a miscalculated project estimate can hamper the whole project and sometimes the whole business. That is why every Project Manager should take all measures while estimating a project. Choosing the right kind of project estimation methods also plays an important role in every project and this comes easily by attending the Project Management certifications course. Different kinds of the project have special requirements, and there is a separate project estimation technique which will be vital for that one.  

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