Project Management

up with an estimate that represents your best attempt at pre-
dicting the final outcome of the project, most notably in terms
of cost and schedule.
A powerful combination of your knowledge of the project,
your sense of what you don’t know, your experiences on previ-
ous projects, the documented experiences of countless other
project managers, and some good old-fashioned project man-
ager judgment of your own leads you to the conclusion that an
estimating shortfall exists. In other words, there’s a gap between
the sum of your individual work element estimates and where
you know you’ll end up at project completion. This gap is creat-
ed by your inability to understand exactly how to synthesize all
of the uncertainties. According to traditional project manage-
ment practices, the gap is supposed to be plugged using—you
guessed it—contingency.
And now the real world ....
There’s relentless pressure to do things faster, cheaper, and

An Overview of Planning and Estimating 111

An Estimate Is More than Just a Number

We often think of an estimate as a figure alone. But if you get

into the habit of making the following items part of every estimate

you prepare and present, you’ll be helping yourself and others to

understand the true nature of estimates:

• A range of possible outcomes.Provide more than just your best
  guess (or most likely outcome).Always indicate that the final out-
  come couldfall somewhere within a range.To give an exact figure
  without this type of qualification suggests a level of knowledge or
  insight that you probably don’t have.The size of the range should
  reflect your level of uncertainty.


• The basis for your estimate.Describe how you calculated the
  estimated value and what assumptions you made in arriving at that
  figure.You’ll also use this information as valuable insight when
  changes occur later on.


• Any factors that could affect estimate validity.Some esti-
  mates have limitations outside of which the validity of the estimate
  cannot be assured. For example, will your estimate be valid three
  months from now? Is it valid throughout the U.S., or only in the
  Southwest? Will it be valid if the work is subcontracted?