A lot of discussion on estimation recently. A lot of great arguments but a lot of good old mistakes we’ve already went through. This brought me to a few random thoughts on estimating techniques.
- Estimation technique which involves discussion between different people is better than one which just simply uses their estimates as input.
- Using factual recorded historical data is better than basing just on experience.
- Smaller tasks can be estimated way better than big chunks of work.
- Every estimate starts with some kind of guess at the very beginning.
I know these should be obvious yet I’m surprised how often people:
– forget about them
– deny these are true
Then they head towards wild guesses with some magic number applied, which may have some sense but not when used instead of real estimation.
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2 comments… add one
On the 2nd one – be careful. History can work for or against you. If you have a history of under-cutting everyone else you may run into problems raising rates if people think you are the “cheap” firm. If you’ve traditionally had higher prices and start quoting lower, clients often wonder if there has been a dip in quality as well. And additionally the market changes permanently, and you should adjust in real time.
Gabriel,
One thing I didn't specified here is I separate work estimates from pricing. If I want for some reason win the contract I can still undercut prices no matter if my schedule is more or less reasonable.
If I play with high prices there's no problem to keep the prices high even though you know project will be fairly easy.
And one more comment on undercutting: if your estimates are poor and you're always after schedule you either have high margins which covers that or you aren't profitable. In the latter case it's usually better not to do a project at all.