![]() ![]() We want to avoid the situation where everyone adds contingency, and the final estimate is far from the likely cost. For example, when asking our team for activity estimates, we should be clear if we want them to add contingency or if we will. On the other hand, if we estimate too high, then worthwhile projects might not get funded because the ROI looks poor, or we are criticized for overly padding our estimates.Īnother problem can occur when there is poor transparency or communication. If we estimate too low, we may have to stop the project and go back to the sponsors for more money. The challenge is to create reserves appropriate to the uncertainty and likelihood of additional costs. This allows us to proceed when the inevitable surprise occurs. Instead, we need to build reasonable and transparent buffers/reserves/contingencies into our estimates and budgets. So it would be unrealistic and irresponsible to estimate for only what we can see required today. They contain valuable cost-estimating information-both successes and shortcomings - and can help in estimation and budgeting. Consult any relevant lessons learned registers.Make sure estimates include costs for all people involved and the resources they will need.Review the list of assumptions for possible additional costs or the need for contingency if any prove false.Consider possible risks that may impact cost – do we need to develop and include a contingency?.Make sure everyone is clear on the units of measure that will be used (person-days, dollars, ideal time, etc).Determine which estimating techniques will be used.Check with the resource supplier to make sure no incorrect assumptions have been made.Gather all the relevant input information that will help prepare the estimates ahead of time.Everyone has a bias and blind spots enlisting a small estimation team will limit individual oversights. As well as using multiple approaches to estimation, engage multiple people.Additional tips to bear in mind when estimating include:
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