Key Concepts We Learned From Chapter 8

Chapter 8   The Art and Science of Accurate Estimating

1. A successful project plan relies on accurate initial estimation. In the estimation, one should try to avoid several common mistakes: such as making “Ballparks in evaluators” making estimation without complete specifications, confusing between estimate and bid, and padding the estimation with over budget on time and resource. 
2. To accurately make the estimation, one should have the right people to make the estimation. These estimators should be very experienced, key expert of the project, and they must understand the goal and techniques of estimation.  The estimation has to be made based on experiences. A good and accurate estimation go through three phases. It starts with an idea evaluation or a “ballpark estimation”, then conducts the order of magnitude estimation, and finally moves into detail estimation.
3. There are four estimation techniques. The first is the phase estimating. We can break the project into multiple phases and estimate the cost and schedule for one project phase at a time. It on one hand simplify the estimation process, on the other hand, it also helps customer to reduce the risk in the development process. Second is the apportioning. It is a top-down estimating based on a formula derived from historical data in similar projects. In the same time, apportioning helps to divided the project into smaller pieces. The third one is parametric estimates. Base on the large set of historical data, one can develop a solid parametric formula or model to estimate or analyze the project. The fourth technique is the bottom-up estimation, where all the detailed tasks are estimated and the n combined to sum up into the full estimation. It requires more efforts but represent more accurate estimations.
4. Further down the road, we need to build a detailed budget estimate. We should identify the source of data for the detailed budget, adding internal labor cost with using the Burdened labor rate (average labor cost), making internal equipment cost with one time deal or multiple project shared equipment, estimate the external labor and equipment, as well as the material cost.
5. The project manager should ensure the plan generating the good cash flow schedule so as to ensure the continuity of the project in terms of both labor and other resources.