10 Tips to Create Accurate Project Estimates

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10 Tips To Create Accurate Project Estimates
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Contents

1. Introduction
2. Discussing Project Priorities
3. The Numbers Should Not Just Fit The Budget
4. Consider The Risk Factors
5. Detailed Breakdown
6. Follow Proper Process Planning
7. Clarify Assumptions
8. Include Contingency
9. Appreciate The Client Business
10. Include Common Activities

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Introduction

• Project estimation is like predicting the future.
  Making an accurate project estimate can be a
  daunting task for project managers. The project
  estimate is not only affected by known factors
  like budget, resources, type of project and its
  scope, but also unknown variables and risks.
• The project manager faces several challenges
  while estimating. However, accurate project
  estimate is essential for the success of the
  project and the organization. With the right
  project estimation techniques, the project
  manager can accurately make the estimations. Here
  are a few tips for accurate project estimation.

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Discussing Project Priorities

• To create accurate estimation for the project,
  you need to elucidate the project priorities. For
  instance, in a project you can afford to incur
  more costs but cannot extend the time period.
• You have to let your team know the priority so
  that they can create an effective project
  estimate to accomplish the project successfully.

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The Numbers Shouldnt Just Fit The Budget

• It is a tendency of project managers to keep the
  estimate numbers within the boundaries of the
  budget. This type of project estimate may look
  idealistic on papers, but in the practical world
  it doesnt serve any purpose and it becomes
  difficult to justify any excess later on.
• If the budget cannot be altered, try to find out
  what can be done within the limited budget.

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Consider The Risk Factors

• There are inherent risks in projects. Some of the
  risks are known to your team and some of them
  will be hidden. A quick risk assessment is not
  fruitful in such cases.
• Your team has to be aware of risk management to
  create an accurate project estimate. You have to
  implement the proper risk mitigation plan in your
  project estimate.

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Detailed Breakdown

• Make sure to perform detailed breakdown analysis
  of the project. The more detailed breakdown will
  result in more accurate estimation.

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Follow Proper Process Planning

• After breaking down the project in smaller
  components, the three scenarios for each
  component must be analyzed worst case scenario,
  best case scenario and most likely scenario.
• This analysis should be done especially for those
  components which are relatively risky or new for
  the team.

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Clarify Assumptions

• Make sure that you and your team are on same page
  when creating project estimates.
• For instance if your team gives you an estimate
  of successfully completing a task in a given
  time, make sure that their assumptions of the
  task matches yours.

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Include Contingency

• Always include contingency in your project
  estimates. Contingency can be in terms of cost,
  man hours and resources.

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Appreciate The Clients Business

• Being polite to the clients while asking for
  money is the best way to get paid quicker while
  keeping the professionalism intact.
• Always add a Thank You note at the end of an
  invoice and let the client know that you
  appreciate the business. One may further add
  another line by asking the clients for their
  feedback.

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Include Common Activities

• When making project estimations, the project
  manager usually overlooks common activities like
  meetings, edits etc.
• However, these activities are quite frequent in
  any project and must be considered in project
  estimation.

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Use The Lessons and Data From Previous Projects

• If an owner is registered for VAT, then he must
  include his VAT details, on the invoice, and keep
  copies of all the sales invoices, even if they
  get cancelled or get produced extra by mistake.

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Use The Lessons and Data From Previous Projects

• Reviewing the information from similar projects
  you have done before will help in creating better
  project estimates.
• If there is a task you have done before, you will
  have a clear idea about how much cost, resources
  and hours it will take to complete the task.

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More Than One Technique

• Always use more than one project estimation
  technique to create project estimations. This
  will help you make your project estimation more
  accurately.

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Choose The Right Tool
All the above mentioned activities become
cumbersome when traditional methods of project
management. Using a project management
application helps managing and billing for
projects more accurately and efficiently.
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