Tips on Not Stabbing Yourself with a 'Sharpened' Project Estimate

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Ten Online Project Management Mistakes to Avoid

Tips to get your project management initiative online.

This may come as a surprise to some, but executives (including the CTO) tend to gloss over details as they compile their annual budgets. Once the IT team gets into the weeds of planning for an actual rollout, that can create more than a few problems. Shaky costs estimates often result in the dreaded "sharpen your pencil" edict-roughly translated, that means "make this happen for free." And of course, that is not going to happen.


Project management experts Jeff and Tom Mochal discuss the best ways to manage your way out of implausible budget constraints in the book excerpt , "Change Assumptions to Revise an Estimate," which is available to IT Business Edge members here in the IT Downloads library. The 6-page PDF is a chapter from the book "Lessons in Project Management," in which the authors tackle common project management issues by postulating a hypothetical (but altogether likely) PM headache and then describing the "lesson" learned from the example.


In this chapter, project manager "Jerry" comes back to his boss with estimates on an OS upgrade project that is a bit high-60-percent-above-budget high, to be precise.


The "lesson" derived from the situation is that some cost overruns are to be expected, and that most companies understand this as they go through the budgeting process. The authors suggest that:

The company expects the estimates to be off somewhat. In fact, Jerry's boss told him if his estimate was closer to the original budget, they could go back and ask for more money. However, his boss feels he will not be able to ask for a 60 percent increase. That type of increase will either not be funded at all, or the additional funding will probably require another approved project to be cancelled.

So, that's not good.


The book chapter walks through several options and offers a number of helpful hints, including:


Do not just arbitrarily adjust your budget figures. This is a really bad idea for two reasons: 1) You are a PM, not a magician, and you certainly are not going to be able to just squeeze out 30 percent of a project's costs by close management, and 2) You don't want to just take the "heat" that will come with overruns. Executives tend to reserve that kind of slack for themselves.


Re-evaluate the work estimate at a granular level. Particularly for a project as repetitive as an OS upgrade, you can simply execute the task once and then average it out over X instances, as opposed to simply taking an "expert's" advice on how long it should take.


Look for ways to improve an existing business process. Estimates tend to be based on the ways things currently get done. If you can find a better solution, you can "sharpen your pencil" and contribute to global business improvement at the same time.


Of course, ultimately, "Jerry" is probably going to have to go back to the business drivers and try to negotiate a change in project scope. This can mean delaying some work or completely eliminating some aspects of the project. It's a delicate negotiation process, covered in solid detail in the book excerpt. It's an interesting read that you should definitely check out.

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