Most of what I’ve written so far assumes that the project manager is usually in a situation where Sales has closed a deal for a project and the information is passed on to the Professional Services portion of the organization for execution. The project manager is assumed – unfortunately – to have little to no input into the estimation/sales portion of the project and he or she basically gets what they get. That would be in terms of negotiated resource hours, dollars/budget, and the statement of work (SOW).

 

 

 

 

Jason Charvat writes, in his book “Project Management Nation,” about the estimation process form the PM perspective – this would coincide with the type of work I performed earlier in my career where all high-level requirements gathering, estimating, pricing and negotiating the engagement with the internal business sponsor (these were all internal projects at a major corporation) rested on my shoulder. Talk about control…I loved it. Here is Mr. Charvat’s section from his book – this covers what he calls the estimation process.

 

 

 


The Estimation Process

 

 

 

 

 

 

 

The project manager should remember that the estimation that results from the planning phase is not final and is considered a temporary estimate. Once more detailed project planning is performed and the project costs and WBS schedules are fine-tuned, a more accurate estimate emerges. Basically, the estimation process has a few primary steps:

 

 

 

 

 

 

 

 

 

 

 





     
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  • Develop the WBS.




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  • Estimate each part of the WBS constituting the total project.




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  • Schedule the work according to each WBS task.




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  • Determine the resources needed, quantities, and availability.




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  • Obtain the latest resource rates, including next salary reviews and increases.




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  • Determine the level of effort needed to complete each WBS task.




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Something that is very important during the estimation process is that project managers ask the client to pay a price that is relevant to the perceived value of what they receive. If the client is willing to pay for the project, the project manager needs to determine whether it is profitable enough to do the work. To determine this, project managers must determine cost. This is where the estimation is needed.

 

 

 


What to Include in a Project Estimate

 

 

 

 

 

 

 

 

 

 

 

 

 

 





     
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  • Internal labor or cost of employees - Burdened cost to company—benefits included




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  • Hardware costs - Servers, printers, workstations




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  • Software and licensing - Application software, downloaded software patches, code




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  • Travel and accommodation - Airfares, hotel, tolls, gas




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  • Administrative support costs - Personnel, finance, and legal support




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  • Training costs - User training, computer-based training, lesson plans




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  • System documentation costs - Manuals, policy & procedures, on-line documentation




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  • Stationary costs - Project stationary




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  • Infrastructure costs - Office space, desks, rent, parking




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Estimating the Effort

 

 

 

 

 

 

 

It is said that you cannot manage what you cannot measure. No matter what project a project manager has been allocated or assigned too, the project estimate should include the following:

 

 

 

 

 

 

 

 

 

 

 





     
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  • Size of the project




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  • Resources required




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  • Project duration




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  • Costs needed to complete the project, labor, hardware, travel, etc.




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Estimates in the IT industries are incredibly difficult to complete due to so many unknowns. The initial estimate is, in many ways, the most important. The initial estimate will be a focal point with which the project manager can compare all future estimates. Because of this, there are several recommended steps to follow when achieving an initial estimate.

 

 

 

 

 

 

 

 

 

 

 





     
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  • Break down the project requirements as far as possible to subsystem levels (WBS).




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  • For each WBS element, identify its similarities with previously developed projects and use this historical data.




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  • For those WBS element units not strongly related to previous IT projects, use SMEs to estimate the size of those elements needed.




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  • Form the size estimate for the entire project by rolling up the estimates for all the WBS elements.




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  • From historical data and expertise, estimate the level of effort.




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  • Divide the size estimate by the work rate to obtain an estimate of the effort in work hours.




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Once the WBS has been developed, many project managers move directly to determining the duration of the task. This is normally done using a software tool, and it visually appears as though the project manager is on the right track. This is not the correct approach; it creates room for errors and bad planning. Remember that it takes a lot of skill and experience to estimate all WBS tasks. For example, it can take one seasoned IT architect a few hours to do a server capacity assessment, but the same task could take two junior IT architects double the amount of time to perform.

 

 

 

 

Similarly, a situation may arise where only one person can do a specific task, such as cloning a server. Only one resource can do the specific task, not two. Therefore, in this case, the emphasis is on ensuring that the resource is best-qualified to perform this task. The project manager also needs to discuss the issue with an SME to determine the amount of effort. The cost per task is directly related to the resources and effort needed. The project manager must accommodate the level of effort needed to perform the task.