The Tech Estimate
You’re building a tech estimate for a new project. You want to be as accurate as possible, but there are so many variables and unknowns. How do you create an estimate that will stand up to scrutiny?
No matter what business you’re in, effective communication is key to success. This is especially true when it comes to tech estimates. Estimating the scope, timeline, and cost of a project can be a tricky business, but getting it right is essential to keeping your tech team on track and your business running smoothly.
There are a few routes you can take when approaching an estimate, each with a slightly different process.
This estimation technique involves setting a project budget and then dividing it up between different stages or tasks. Businesses use this technique early in a project to see if the amount a client’s willing to pay is not only enough to cover costs but make a profit. Top-Down estimation can be a helpful way to ballpark the cost of a project, but it’s important to remember that it’s just an estimate.
Bottom-up estimation is similar to top-down estimation in that you’re estimating a project according to stages or tasks. The main difference is that with bottom-up estimation, you start by estimating the cost of each individual task before putting together a total budget for the project. This can be a more accurate way to estimate the cost of a project, but it’s also more time-consuming.
This is a type of estimation where you base a new project budget off an old one. If you did a development job for a similar client with similar scope, you can use that project as a baseline. This is a fast way to estimate, but it’s not always accurate. If the two projects are vastly different, you could end up over-or underestimating the cost of the new project.
This is another type of estimation where you base your estimates on historical data. With parametric estimation, you develop equations that relate various factors (like time and cost) to the desired outcome of the project. This technique is often used in conjunction with bottom-up estimation to get more accurate results.
It’s important to remember that no matter what estimation technique you use, there will always be some uncertainty involved. The goal is to create an estimate that’s as accurate as possible given the circumstances.
Picking the Right Approach
The right approach for your tech estimate will depend on several factors, including the size and complexity of the project, the amount of information available, and the team’s level of expertise.
For example, if you’re working on a small, straightforward project with a well-defined scope, top-down estimation may be the best way to go. However, if you’re working on a large, complex project with lots of unknowns, bottom-up estimation may be a better option.
Finding an approach that works best for your team and projects will take some trial and error. The important thing is to experiment and find what works best for you. One size does not fit all when it comes to estimates, so pick the approach that makes the most sense for your project.
Define The Scope Of The Project.
The first step in any estimate is to define the scope of the project. This means deciding what work needs to be done and how much time it will take to do it. Estimating the scope of a project can be difficult, but it’s essential to get it right.
If you underestimate the scope, you’ll end up with a project that takes longer and costs more than you planned. If you overestimate the scope, you’ll end up with an unfinished project and over budget.
To avoid these problems, it’s important to involve your team in the estimation process. They will have a better understanding of the work involved and can help you to come up with a realistic estimate.
Once you’ve agreed on the scope of the project, you need to decide how much time it will take to complete. This is where things can start to get tricky. There are a few different ways to approach estimating the timeline for a project.
The most important thing is to be realistic. If you underestimate the amount of time it will take to complete a project, you’ll end up with an unfinished project and unhappy customers. If you overestimate the amount of time, you’ll end up wasting time and money.
Make Sure All Stakeholders Are Aligned.
Before you start estimating, it’s important to make sure that all stakeholders are aligned on the objectives of the project. This means that everyone understands what the project is supposed to achieve and that there is a consensus on these objectives. Once you have alignment, you can move on to estimating.
It’s also important to make sure that everyone is clear on the timeline for the project.
If there are any changes to the scope or timeline, make sure to communicate these to all stakeholders. This will help to avoid misunderstandings and keep everyone on the same page.
Use Historical Data.
When you’re estimating the time and cost of a project, it’s helpful to use historical data and previous projects as a guide.
This will give you a good idea of how long similar projects have taken and how much they have cost in the past.
If you don’t have any previous projects to use as a guide, you can look at industry benchmarks. This will give you a general idea of how long a project should take and how much it should cost.
It’s important to remember that no two projects are the same, so don’t rely on historical data too heavily. Use it as a guide, but be prepared to adjust your estimates if necessary.
Build-in contingency time and costs.
When you’re estimating the time and cost of a project, it’s important to build in contingency for potential delays or unforeseen problems. Ensuring that your project stays on track even if there are some bumps along the way. A good rule of thumb is to add 10-20% to your estimates for contingency. Give yourself some elbow room. If you’re working with a tight budget, you may want to add even more contingency.
Be Prepared To Adjust Your Estimates.
As the project progresses, you may need to adjust your estimates. This is normal and to be expected.
You’ll learn more about the project, you may realize that some tasks take longer than you thought or that there are more dependencies than you originally anticipated.
New information can arise that changes the scope of the project or the amount of time and resources that are required.
It might sound like a no-brainer at this point but communicate! Noone wants to be surprised when it comes to spending money.
Be Prepared to Defend Your Estimate
Once you’ve created your estimate, it’s time to present it to the client or project manager. Be prepared to defend your estimate and explain how you arrived at the numbers you did. If there are any major discrepancies between your estimate and the client’s budget, be ready to negotiate.
Keep everyone in the loop by regularly communicating your estimates and progress updates.
Regular communication is key to keeping everyone in the loop on your estimates and progress updates.
This will help to ensure that everyone is on the same page and that there are no surprises. Be prepared to adjust your estimates as the project progresses and new information arises. As the project progresses, you may need to adjust your estimates.
Get feedback from your team and make changes if necessary.
As you’re working on your estimates, it’s important to get feedback from your team.
Feedback loops will help to ensure that you’re on the right track and that your estimates are realistic.
They may have insights that you didn’t consider or they may be able to point out potential problems with your estimates.
Make sure to listen to their feedback and make changes if necessary. This will help to ensure that your estimates are as accurate as possible.
Document everything so you can refer back to it later.
Having a clear and well-documented process is important for both you and your team. Being able to retrace your steps and refer back to your process will help to ensure that your estimates are as accurate as possible.
You can use this information to improve your process for future projects. Make sure to document everything from your initial research to your final estimates. Creating a clear record that you can refer back to later.
You need everyone to be on the same page and have a clear understanding of what needs to be done. Making it easier for you to refer back to later if there are any questions or problems.
The Final Estimate
Once you’ve gathered all of your information and feedback, you’ll be able to create a more accurate estimate. This estimate will serve as a guide for the project.
It’s important to remember that estimates are just that: estimates. They are not set in stone. Things can and will change as the project progresses. Be prepared to adjust your estimates as necessary.
Keep these tips in mind when working on your next tech estimate and you’ll be sure to create a more accurate and effective estimate.