Do you also feel that making project estimates is a child’s play but end up in a mess at a later stage? Well, you can avoid the mess if you have good project estimate maker software with you.
Not only will it let you manage stakeholder expectations with ease, but it will also motivate your team to think beyond milestones and invoke their creative genius. Want to go a step ahead? Use time tracking software to manage projects and read the following tips to nail your project estimates.
1. Work Out An Accuracy Level
You must have a certain level of accuracy before you actually make an estimate. The more accurate you are, the lesser troubles both parties will have throughout the project. But, in the initial stages, you will not have enough information to make highly accurate estimates. Usually, there are three main ways to categorize estimates.
a) Rough Order of Magnitude– It varies between -25% and +75% accurate.
b) Budget Estimate
This lies between -10% and +25%. So, this gives you plenty of margins to design your estimates.
c) Definitive Estimate
Well, don’t go behind the name. In such kinds of estimates, you usually have a range of -5% to +10%. This gives you a little room for experiments. Whichever range you use or choose to make one of your own, make sure your stakeholders understand it.
An estimate of $20k doesn’t mean you will wrap up the entire project in the said amount. We suggest you include the from and to figures when presenting any numbers to keep everyone on the same page.
2. Document Your Assumptions
Project estimation software lets you create estimates based on assumptions. This is because you are yet to complete your project.
When you say a task will take 10 hours, you need to add the assumption that you will ask a fellow colleague to do the work, and they will take their time in understanding the whole idea behind it. Also, you need to consider that allocating a task to an experienced worker and a new one will be different.
An inexperienced person will certainly take in more time, and you will need to add that in your estimate. Luckily, you can always rely on your time tracking software to estimate the number of hours required to get work done.
3. Curb Optimism Bias
Some estimators are too optimistic and believe that they can work around any scenario and wade risks. But, often, there is pressure to work on a tight budget, and they make estimates to please the client and get the project. Trust us, the situation is dangerous and can set you up for a loss.
So, the key is to be realistic and not feed numbers just for the sake of your project estimation software. Take your time reviewing your figures, trying out new techniques and bringing a balance to your calculations. If the numbers fit with your estimates, consider reducing your scope and avoid working for peanuts.
4. Have An Accurate Task Breakdown
When making project estimates, you will need the minutest level of detail possible. Before you kickstart your project, make sure you analyze the data in your time tracking software and then only proceed to develop a task breakdown.
But, make sure you don’t go overboard with it as you might tend to miss out on other activities. You cannot assume that your expenses will be covered automatically when you don’t have a proper budget in place. Make sure you give a thorough thought and then only make an estimate. This will help you build trust with existing customers and onboard new ones with ease.
5. Include Contingency Costs
Well, you might skip adding contingency costs to your estimates at the task level and on the project level. While this could be an approach you might have followed, it can become an issue at a later stage.
This might make your project look cheaper but can take your clients for a toss if you overshoot your budget. They may be perplexed at seeing costs that came out of nowhere. So, make sure you add contingency costs in your project estimation software and be crystal clear with your estimates.
Wrapping up
So, all you need to do is invest in good project estimation software and integrate it with time tracking software to get the best estimates. It will not only increase your profitability by 10x but also save the precious time of your employees. Still wondering which solution to purchase, don’t worry, we have your back.