6 strategies for project managers to improve cost estimates

6 strategies for project managers to improve cost estimates

If there is one thing that is critical in the project planning phase, it is getting your estimates right. If you take a project management training course, you will learn about how critical estimates are to your project budget and schedule. If you do not put together a good estimate, you are simply going to be adding more uncertainty into your portfolios, programs, and projects. There are lots of different ways the project estimates can be improved, so let’s take a look at six effective strategies in further detail…

Make sure you define the work correctly 

The first thing that you need to do is make sure that you define the work correctly. A lack of project definition is one of the main reasons why project managers do not estimate their project costs correctly. Project teams do not identify significant work packages and associated project activities. To overcome this issue, you need to engage stakeholders in a WBS/Work Breakdown Structure exercise to gain buy-in and better definition. 

Use correct estimating techniques 

There are lots of different courses offering training for project managers, and they will present you with different estimating techniques you can use. For early estimates, you should use analogous estimating. Do not use a single date; make sure you provide a wide estimate range. 

Make sure the correct members of the team give the estimates 

So, who should be providing the estimates? It should be the individuals who are going to be performing the work – not the project manager. After all, these people have experience performing the tasks and so they are in the best position to estimate. 

Use progressive estimates 

You need to make sure you revise estimates. One of the biggest mistakes that people make is putting together an estimate and then viewing it as a one-time thing. As you gain added information, your estimate ranges should be revised to ensure greater accuracy. 

Track effort and duration 

Aside from the steps that have already been mentioned, you must track and compare effort and duration to the estimated effort and duration by using time tracker software.

Define contingency reserves 

Last but not least, you need to make sure that you identify any potential risks within your project activities. If you do not identify risks at activity or work package level, this can lead to activities costing more than anticipated and taking longer. Contingency reserves must be defined for the project budget and schedule when it comes to significant risks.

As you can see, there are a number of different strategies that can be used to help you improve your cost estimates for every project you take on. If you follow the strategies that have been mentioned above, you should notice a considerable difference. This will ensure that there is less uncertainty in your projects, which will lead to more chance of you staying on the right path in terms of your schedules and budgets too.

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