Project Estimates and Understanding Success
Organizations often doom projects to fail right from the start. Whether relatively small agile projects or massive megaprojects, a combination of poor estimating and poor understanding of estimates significantly contributes to failures. There are lots of clever tricks and complex calculations that enter the scene to deal with the potential of failure; some organizations even create a string of sacrificial “loss leader” projects to absorb the fallout from poor estimating practices. However, there is little writing that walks leaders through what estimates are and how to use them to establish project baselines and expectations — how to define success or failure in terms of the tolerances and techniques we prescribe to develop them.
That’s where this article comes in.
THE NATURE OF ESTIMATES
When examining the reasons projects fail, it is immediately clear how many of the problem areas converge at themes of misunderstanding the nature and purpose of the relevant estimates. First, and most obvious, we must remember that an estimate is a calculated guess, not a guarantee, with an acceptable level of accuracy[1] (tolerance range or ±%) based on the methodology used. These estimates are not an upper limit or extreme but are about what we can expect based on what we know of this project in performance, cost…
