I have recently been contacted by one of my blog readers who asked me a very interesting question:
What are the estimation accuracy norms for different phases of the projects?
I found this question to be so interesting that I decided to dedicate my next posting to this particular topic. But in order to answer this question in full, let us start at the very beginning, the definition of the estimate itself.
The Definition of the Estimate
According to the Guide to the Project Management Body of Knowledge (PMBOK) published by the Project Management Institute the estimate is:
An assessment of the likely quantitative result. Usually applied to project costs and durations and should always include some indication of accuracy (+/- x percent)
Think about this definition for a while ... If we are to believe the opinion of one of the leading project management institutions in the world, then a single number, say, "9 months", "$100,000" or "350 man-months", is not an estimate. However, statements like "9+/-3 months" or "$75,000 to $125,000" are indeed true estimates.
While this fact is well-known to any experienced project manager, many executives, sales, marketing and operations professionals are frequently very surprised when this piece of information is brought to their attention.
Let us try to explore some more and find the root causes of this phenomenon.
There is Uncertainty in the Estimation Process!
We must understand that there is almost always a serious degree of uncertainty in the estimation process. Here are just some of the questions that can never be answered at the very beginning of the project: