The Estimating Problem

Kristie Lin

Colorado State University Global

PJM 500 Module 4 Critical Thinking

Dr. Melinda Hollingshed

3/7/21

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The Estimating Problem

Having an accurate estimation of the project timeline is crucial for all stakeholders.

Investors want to know when they can start to see a return on their investment, and the project

management team needs to deliver the product on time to please their client or investors. If the

project timeline comes up short, there could be a high chance that the project would be

completed late. Additionally, if there are too many resources allocated for a section of the

project, those resources could be wasted. In contrast, if too few resources are allocated, burnout

of employees and a prolonged timeline could occur. All of these scenarios are not ideal and can

increase project costs or delay the project, which is why choosing the correct method of

estimating is pivotal to the success of a project.

Case Study Synopsis

Barbara’s company had just won a bid for a new project. The estimating team had already

submitted their estimates in their proposal, however, Barbara wanted to review the estimates.

One issue with the estimates that Barbara had identified was a critical work package that the

estimating team predicted would take twelve weeks to complete. With Barbara’s experience, she

believed that the estimating team was completely off with their three-point estimate.

Throughout the case study, there were multiple methods of estimating mentioned,

including triangular distribution, analogy estimating, and expert judgement. Triangular

distribution would have estimated the critical work package would be completed in thirteen

weeks. According to Peter, who is a grade 9 employee, and considered to be an expert on this

work package, the more realistic timeline would be closer to 16-17 weeks. Peter also suggested

that to account for the complexity of the project, analogy estimating would have been the better

method to predict the estimate.

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Even if the estimating team considered adding more man power to the critical work

package, Peter believed that additional people would not shorten the schedule, and instead make

it worse. The estimating team had also allocated a grade 7 employee full time to the critical work

package and predicted that with the grade 7 employee, the work package would be completed in

12 weeks. According to Peter’s experience and knowledge, a grade 7 employee would probably

take approximately 20 weeks, not 12.

Critical Path

The critical path of a project is basically the minimum amount of tasks or activities that

are required in order for the project to be completed (Project Manager, n.d.). Any alteration or

delay with any of these tasks or activities can cause a setback and potentially postpone the

delivery date. In the case study, part of the critical path is the critical work package that is under

review. The critical path determined by the estimating team was allocated 12 weeks to complete

the critical work package. Judging by the opinions of Barbara and Peter, the likelihood of the

critical path being extended is very high.

Three-Point Estimating

As pointed out in the case study, using the three-point estimating process does not

account for any complexity factors and it is best utilized for smaller projects that are not as

complex as the current project that Barbara is working on (Kerzner, 2017). If the estimating team

had followed Peter’s advice and used a combination of analogy estimating as well as expert

judgement, the team would have gotten a more accurate estimate. Being realistic about

deliverables and timelines will only help the company when it can complete the project on time

and not be penalized for a late delivery. It is never a good thing when a company over-promises

and under-delivers and in this case, Barbara’s company is at risk of doing so. The three-point

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estimate would be over-promising the client considering all the other estimating methods

predicted the project would take longer. If the project were delayed, Barbara’s company would

have under-delivered.

With the three-point estimating method, there can be some advantages to utilizing this

process. There is also a point and time of when the three-point estimation would be the best

method to employ. Three-point estimating allows organizations to quantify risks and have it built

into the project budget (Roseke, 2018). The issue with three-point estimating, on top of not

accounting for complexity factors, is that this type of estimating method requires a lot of detailed

information that sometimes is not available at the start of a project (Roseke, 2018). It is also very

complex to execute. Thus the three-point estimating method was not the right method to use for

this project.

Estimating Process

Before the estimating team submitted their estimates in the proposal, the team should

have gathered more information and consulted other experts. They should have collected

information on recent experiences with similar projects or work, professional and reference

material, market and industry surveys, knowledge of operations and processes, interviews with

subject matter experts, and utilize estimating software and databases (Kerzner, 2017). All of this

information is critical for the estimating team to have in order to make a good estimate (Kerzner,

2017). The project manager should have been consulted as well on the estimates, seeing as how

she is responsible for planning, organizing, and directing the project to its completion.

Recommendation

As far as recommendations go, the company should not just rely on one method to

estimate the project schedule, necessary resources, and costs. Because of the complexity of the

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project, a combination of analogous estimating as well as parametric estimating might give the

company the most accurate estimate of how long the project will really take (Goodrich, 2015).

Being able to take into consideration the timeline of similar projects that have occurred in the

past should provide the company a good layout of what the current project’s schedule will look

like. Parametric estimating is actually said to be more accurate however, taking into

consideration of Peter’s expertise, adding an analogous estimation would provide a more realistic

estimate (Goodrich, 2015).

Conclusion

When it comes down to estimating and planning the project schedule, it is wise to consult

those with previous experience in the specified area. Referring to similar projects that were

completed in the past can also provide a good estimate of how long the project will take. Bottom

line is with the complexity of the project, a three-point estimation is not the best method to

utilize. Instead, a combination of parametric and analogous estimating would be more accurate

and provide a more realistic project schedule.

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References

Goodrich, B. (2015). Analogous estimating vs parametric estimating. PM Learning Solutions.

https://www.pmlearningsolutions.com/blog/analogous-estimating-vs-parametric-estimatin

g-pmp-concept-4

Kerzner, H. (2017). Project management: A systems approach to planning, scheduling, and

controlling (12th ed.). Hoboken, NJ: John Wiley & Sons.

Project Manager. (n.d.). What is the critical path?.

https://www.projectmanager.com/critical-path-method

Roseke, B. (2018). Three point estimating for the PMP exam. Project Engineer.

https://www.projectengineer.net/three-point-estimating-for-the-pmp-exam/#:~:text=Three

%20point%20estimating%20is%20a,in%20to%20the%20project%20budget.

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