Project Management, Time Management, Strategy

Estimating Time Accurately: 4 Tips That Will Make or Break Your Project Budget

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Unless a project or task is something that you’ve repeated many times, estimating time can be daunting. Truth is, very few of us are 100 percent correct even with lots of experience. Contingencies change, conditions are altered, and budgets and schedules collide like opposing forces bent on making even the most exacting estimates wrong. Eliminating risk is impossible, but you can mitigate the impact of inaccurate time estimates on your budget by experimenting with these tips.

1. Choose and compare your methods

Bottom-up estimates let you craft a forecast of an entire project. To create this type of estimate, you break tasks into smaller more detailed ones and then decide how much time will be needed to complete each of them. The cumulative nature of bottom-up estimates makes them more reliable than comparative approaches which rely on using past experience and project timelines as a guide.

Three-point estimates require that you make three separate estimates of time and compare them side by side. One estimate represents the most likely result, while the other two are based on best- and worst-case scenarios. This kind of estimate takes more work, but it helps when you need to present a budget that includes a cushion for unknown dependencies.

Parametric estimates can also be useful in certain circumstances. You can use parametric forecasts by calculating the time it takes to complete a single task, then multiplying it by the total number of tasks involved. This is most useful when a project is made up of fairly uniform, repetitive steps like compiling lists or performing data entry. If one page of a spreadsheet takes 1.5 hours, then it is easy to extrapolate that 10 would consume 15 hours of your time.

Tip #1. You can try using a combination of these techniques to test the validity of your estimates. Over time, you’ll learn which ones are most effective with different kinds of projects. This will make your budgets more reliable and you’ll more easily identify inefficiencies in your approach.

2. Calculate your fudge ratio

Project management pros will tell you that the magnitude by which you over- or under-estimate the time required to complete a task is surprisingly constant. That’s because most people are usually consistent in the optimism or pessimism that they build into their forecasts. The result can be catastrophic to your budget either way: on one hand, underestimating results is giving away time for free, while overestimating can lead to a loss of billable hours.

This tendency to inaccurately, albeit consistently, project time estimates is called your “fudge ratio” and getting to know yours means you can adjust up or down to improve your precision by simply multiplying by your ratio. Let’s try an example: your expected time is 4 hours, and your actual time is 6 hours. Your fudge ratio is 6/4 or 1.5 hours.

Tip #2. Keep track of your expected time and actual time with time tracking software. Using this information, you can analyze how well you’ve met your forecasts and calculate your fudge ratio. Over time, you can improve your accuracy by multiplying your initial estimates by your unique ratio to come up with a fairly accurate projection.

Tip #3. Measure your fudge factor every 3 months and compare it to your previous figure. You may discover that you’ve made improvements in your time estimates simply by becoming more aware of your fudge ratio. If it improves, you’ll know you’re on the right track and if gets worse, you’ll want to be aware of that as well.

3. Break things down appropriately

Achieving an appropriate level of granularity is crucial to plotting time accurately. Working with blocks of time that are too big will cause you to overlook important details, while if your blocks are too small you’ll get lost in the minutia. Consider also that the time you spend estimating tasks rather than simply doing the work is a drain on productivity itself. Getting too granular is a huge time suck, while having chunks that are big will result in mismanaged work that could undermine your profitability.

“Create a new blog” is undoubtedly a intricate project, and this task alone does not provide enough steps for an accurate time estimate. It requires that you break things down into smaller tasks such as getting a WordPress template, writing your first blog post, and uploading your content. On the other hand, you wouldn’t want to break this task down to a level of granularity that includes choosing your password or turning on your computer.

Tip #4. If you’re not sure how granular to go, you might try breaking things down to the things that you know are achievable in a set amount of time instead of trying to analyze the parts that make up a task. For example, consider what can be done in two hours or an afternoon.

Tip #5. Remember to include the time it takes to do estimates in your project planning phase. When you’re in a hurry due to poor planning, just like with any other work, time estimates are prone to be wrong leading to more problems down the road.

4. Clearly define the scope

You should be able to easily identify the start and finish of each task for which you create an estimate. This will test your knowledge of the actual work to be done, and challenge you to determine the parameters of each project. Tasks that are vague or ambiguous are very difficult to accurately forecast. Good estimates have clear and specific bounds.

One way to look at this is to consider the task to “Write a byline article.” Are you done when the last word is on the page? Or is it after the final edits and revisions are complete? Maybe it’s when the article is published? Consider the entire scope of your project and base it on well defined goals or your estimates could be vastly unsound.

Tip #6. Write down an outline of the key steps in achieving your task or project. This helps you imagine the desired outcome, and you can back out of this picture to create a timeline of activities. Leaving something out can be a big budget buster.

Do you need help estimating and tracking your team’s time? Mavenlink makes it easy and intuitive to input and approve time and expenses— so your team focus on delivering great work.

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