Why project estimation is important for a project manager ?


How many times have you heard of a PM asking for an estimate for a task from a developer, QA and other team members? I am sure that as a developer or other team member you feel that that’s the only job of a project manager apart from asking for status updates. I have heard that a number of time or rather sensed that while talking to the team.

Estimation is a critical responsibility of project manager as it determines the success of a project. Estimations help predict three pillars of a project i.e. the cost, scope and time. In this blog, we will explore why estimations are important for project managers and how it contributes to effective project management.

1. Setting Realistic Expectations:

Accurate project estimations help set realistic expectations for the client about the budget and the timelines for the project at the start of the project. If the client has provided you with a timeline and budget, estimating the project will allow you to determine if the project can be delivered on time and within the budget.

2. Time Management: 

Time is often a critical constraint in project management. Estimations of task durations and the overall project timeline help project managers develop realistic schedules. With these schedules, project managers can effectively allocate time to tasks, monitor progress, and make adjustments as needed to ensure the project stays on track.

3. Resource Allocation:

Estimations help the project manager in allocating resources effectively. The project manager can ensure that the required resources are available when needed and are utilised optimally. It ensures that the resources are not over or under-utilised which might lead to delays and increased costs.

4. Risk Assessment:

Estimation allows the project manager to assess risk that might lead to an increase in budget or delay in project delivery. The project managers can compare the estimated values vs. actual values to determine the project status and assess any risk to the project. The project manager can delevop a risk mitigation plan accordingly.

5. Scope Management: 

Scope creep, the uncontrolled expansion of project scope, is a common challenge in project management. Estimations help project managers define the project scope and its boundaries. When stakeholders request changes or additions, project managers can refer to the original estimates to assess the impact on resources, costs, and timelines. It allows them to make informed decisions regarding scope changes.

6. Performance Evaluation:

The estimates help the project manager in evaluating project performance. The project manager can compare the estimated cost, time, scope, and resources against the actual values. It allows the project manager to make improvements in their other projects.

I have always believed that estimations are never accurate as they are estimates. During the project execution phase, if there is a difference between the estimated and the actual values, it should be communicated transparently to the stakeholders and the customers. In such cases, tasks are prioritised in order to deliver the project on time and within the defined budget.

During my experience as a project manager, I have used two estimation approaches for my projects.

The top-down estimation technique involves giving an overall estimate of the project based on the project requirements shared by the client during the initial stages. During the project planning phase, more detailed estimates are derived by estimating the smaller tasks.

The bottom-up estimation technique involves estimating the tasks to derive an overall project estimate. This approach has proven to share more accurate estimates for the project. Although, it requires efforts before project initiation.

In reality, estimation is not merely a process in project management but a key ingredient to delivering a successful project and having happy customers.

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