The Estimating process is the combination of different techniques and solutions to drive a high quality result. Estimating will therefore focus on the estimates of effort hours.
#Least accurate standard cost estimating technique software
This paper will focus on Cost only from the perspective of labour cost, which is the most important contributor to cost in most software projects. The estimating process is there to ensure that we have planned the project with the correct scope, cost, earnings, resources and deadlines. The estimating process is there to produce more than just the end dollar number or the end effort estimate. One of the reasons is poor estimating, the estimation output and tracking of the assumptions in the estimates. The IT Industry has focussed on improving their process for managing projects, but we still experience projects that fall critically behind schedule and are way over budget. The lost dollar value for USA projects in 2002 was estimated at US$38bn with another US$17bn in cost over-runs. Of those that do complete, the average cost over-run is 43%. 15% of software projects are terminated before they produce anything.Too often Project Managers are faced with poor estimates due to incorrect usage of the estimating process.Īccording to the Standish Group CHAOS report of 2003: Glen Townsley is the founder of Pronamics, and has spent over 30 years building estimating software after a successful career as a civil estimator and project manager.As a project manager one of the most important thoughts at project start-up is the reliability of the estimates. That way, you’ll be the best estimator you can be, every time. Namely, use an industry leading first principles estimating software package that lets you quickly and confidently sanity check pricing, as well as offering reuse of in house standards so you can create your own library for use in future projects, thus giving most of the benefits of Standard Rate Estimating without the pitfalls. If the method of first principles IS being used, then there are ways to make the estimating process faster. Standard rates = fast and accurate BUT only if used in a job where standard measurements are used.įirst principles = takes longer but more accurate when a job is non-standard, or when an industry or region doesn’t use standard measurements. On the face of it, using standard rates means an estimate can be built quickly because all the costs can be drawn from a library.īut if the job is not standard, or if regions and industries don’t agree on what should be a standard measurement, a library of rates becomes far less useful, and far less accurate. This might happen in a renovation or restoration job, where things can be irregular, or speciality works that have custom requirements. The size of the trench will determine the exact requirements for labour, equipment, materials and overheads.
It breaks down every part of the job into the smallest cost units possible, then builds them back up again to price all the specific components. Sounds pretty simple, right? First Principlesįirst principles estimating, on the other hand, makes no assumptions about standards. This means an average cost can be used for laying pipe only when the task being estimated exactly matches the scope of the standard estimate. History will attest that it will generally be the former rather than the latter. In fact, it can be very dangerous to use as the task could be dramatically under or overpriced. On the other hand, if we need to dig a different width trench or the trench contains rock then the standard no long applies. If our standard uses a one metre wide trench and that is what we are going to dig, then we can use the standard to great effect. The library will be based on average productivities in creating the “standard” cost estimates.įor example: to lay ten metres of pipe requires digging a trench, laying bedding, laying the pipe, compacting the haunching and backfilling the remainder of the trench. That means it averages a number of different measurements and builds a library from them.
Standard rates estimating assumes a standard method of measurement. Well, first, let’s take a look at how each method works. In all my years of estimating, I can clearly divide the discipline into two different techniques. GLEN’S SOAPBOX – WHICH ESTIMATING TECHNIQUE IS MOST ACCURATE?
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