The podcast by project managers for project managers. We are taking a fresh look at project estimation. Topics include the estimation obstacles project managers commonly face, key factors essential for accurate projections, the impact of organizational culture, implementing cost management strategies, and navigating the risks of underestimating or overestimating project estimates.
Table of Contents
02:10 … Project Estimating Course03:56 … What do We Estimate?04:46 … Factors in a Project Estimate06:26 … Ensuring Accurate Estimates08:30 … Experience and Experiment10:26 … Choosing the Best Approach11:41 … Estimating Tools12:38 … The Problem with Culture14:27 … Who Participates in the Estimating Process?15:55 … The People Side17:31 … Significance of Historical Information20:16 … Managing Costs22:17 … Underestimating your Project Estimates23:44 … The Issue of Risk Management25:26 … Dangers of Overestimating27:56 … How to Combat Overestimating29:03 … Implementing an Estimating Process33:54 … Closing
BOB MAHLER: ...every time you sign your name on the dotted line, your credibility as a project manager is going to be in question and scrutinized. And the larger the project, the more visible, the more scrutiny you’re going to have. You should welcome that, and you should rise to that challenge.
WENDY GROUNDS: Welcome to Manage This, the podcast by project managers for project managers. I am Wendy Grounds, and with me in the studio is Bill Yates and our sound guy, Danny Brewer. We’re so happy you’re joining us today because today we’re going to dive into the world of project estimation. We’re going to discover the essential elements that demand estimation and the crucial factors driving accurate projections. With our guests, we’re going to navigate the landscape of estimation tools and strategies as we discover a seamless approach for crafting dependable estimates.
Now, the experts we’re going to talk to on project estimating are Ren Love and Bob Mahler. You all know Ren. She is part of our Velociteach team. She also does our Projects from the Past snippets that we sometimes include in our podcasts. And she is the manager of curriculum development at Velociteach. She’s also worked in zoos, science centers, and Disney’s Animal Kingdom before she joined one of the Big Four accounting firms; and she has 10 years of unique management experiences. We’re so glad to have Ren on the team.
BILL YATES: Now let me tell you just a bit about Bob Mahler.
WENDY GROUNDS: Yeah, it’s been a while since we’ve talked to Bob.
BILL YATES: Yeah, Bob started his career with Velociteach similar to what I did, as an instructor. So he taught for a number of years. And then he migrated into sales, a natural role for him. He’s director of business development with Velociteach now. His background, he started out with the military. As a matter of fact, he served our country as a Green Beret through the U.S. Army; served in Egypt, Kenya, Qatar, Saudi Arabia, many places. After 12 years of service with the military, he moved back into the private sector and was a telecommunications specialist there.
Project Estimating Course
WENDY GROUNDS: Bob and Ren have developed a project estimating course which you can find on our website. This is an instructor-led course for group or corporate training. This course will teach students the most common and effective practices, tools and techniques for project estimating. You can email [email protected] if you would like more information or you can find a link to this course on our transcript.
WENDY GROUNDS: Ren and Bob, it’s so good to have you both back on the podcast. I wanted to ask you a little bit about the course. You developed a course for Velociteach on project estimating. Can you give us some background to that?
BOB MAHLER: Well, of course. First and foremost, it’s always a pleasure to be here with the Velociteach team, my home, my family, my livelihood. So project estimating was an interesting and fun course because, as everyone knows, practitioners go through this vacuum towards achieving their PMP where they answer questions about project estimates without any external factors. And it’s usually very simplified. Then, once you start doing real work, you realize, oh, wow, there’s a lot of other things that go into this, like who’s doing the work, and when are we doing the work, and what about risk, or what about quality, and what about stakeholder tolerance?
When a recent client realized that studying for the exam and reality were very different, they reached out and said, hey, we need help. And since you’ve made every possible project mistake in your experience that could be made and then corrected it, you’re the right guy. So that led us through course development for this particular client.
What do We Estimate?
BILL YATES: It was fun for me to watch, Bob, you and Ren collaborate on this. You were getting requirements from the customer, a large hospital system, to develop this course, helping them identify their pain points. And then you and Ren were looking at it going, okay, what should be covered in this estimating class, you know, based on just the knowledge that we have, the experience that we’ve had from different industries, and then also specifically for this hospital system. But let me just back up. Ren, let me throw this one at you. What kind of things do we need to estimate on a project?
REN LOVE: There are lots of things that can be estimated on a project. The three biggest ones that I think come out the most when we talk about project estimating are project costs, how long your project is going to take, and the number of resources that you’re going to need to be getting the work done.
Factors in a Project Estimate
WENDY GROUNDS: What are some of the factors and the considerations that are essential when you’re building out your estimates? What’s the information that you need?
BOB MAHLER: So as Ren previously stated, there are a lot of things that go into any particular estimate. And I’m fond of saying, and I may have just made this up, that estimates are the anchor between scope, cost, and schedule because, if you get the scope right, hopefully, then the estimates, sound estimates, are going to lead you into a solid schedule. And since time is money, it will lead you into a solid budget.
Some of those factors are, how experienced are you at this particular work? How solid are your estimates for this particular material? Who’s doing the work? What’s your efficiency? When are you available? What about inflation? What about interest? And what about the vendor? The list goes on and on. And whenever you think you’ve done enough due diligence, you’re probably only halfway there. If you’re not scared, then you haven’t done enough work on it.
BILL YATES: That’s a good litmus test. I like that, yeah. When you start to feel overconfident, that’s when you’ve probably forgotten to ask a key stakeholder a key question or turn over one more rock. That’s a good point.
BOB MAHLER: And I didn’t even mention risk. As we know, I’m a risk manager, too, and I didn’t even mention risk. Another key consideration is based on the kind of work. Is it dangerous? Do you need to estimate more time and cost? And that list is a whole ‘nother rabbit hole to go into. But I think I’ll stop right there.
Ensuring Accurate Estimates
BILL YATES: All right. So key question here. How do you ensure your estimates are as accurate as possible?
REN LOVE: I can chime in a little bit on this one, Bob, which is historical information can be really, really valuable here. So here’s where you can look at similar projects in the past and say, you know, that took us two years. So let’s start our estimating there and adjust for some of those other factors and assumptions that Bob just mentioned a minute ago. That’s a great starting point, but also making sure that you have the best information possible as inputs to that estimating process. You may hear the phrase “garbage in/garbage out.” If you’re using historical information that is not accurate or effective for some reason, then you’re not going to have the most accurate estimates on this project.
So, for example, if your historical project that you’re looking at took a year off in 2020 because of the global pandemic, thus took three years to do, and you’re looking at this historical project estimate saying, okay, well, that project took three years, this one will probably take three years, too, well, you’re less likely to encounter a global pandemic, hopefully, than that project did. So that’s something to think about, too.
And then the last one I want to mention is estimating in good faith. So you can’t truly get accurate estimates if you have already been given a target in mind from some external person. So let’s say you have a key stakeholder that says, oh, it would be really great if this release coincided with the major holiday a year from now. Well, now you may find yourself trying to estimate your schedule into fitting that timeline, and that is not estimating in good faith. You really cannot work backwards.
So what should happen there is that you do all of your estimates to the best of your ability, go back to that key stakeholder and say, all right, based on what we know, we’re going to need more money and more resources to hit that deadline that you want. And so that’s what I mean when I say “estimating in good faith.”
Experience and Experiment
BILL YATES: Okay, Ren, you mentioned historical information, which is so important for estimating. We’ve got to have historical information in order to really feel like we’ve got a solid anchor for our estimates. I remember you did some research on the Sydney Opera House. I don’t think there’s another Sydney Opera House,
