How to Improve Your Project Cost Estimation

Do you know how long it’s going to take to complete any given project, and how much it will cost? In this episode, Curt talks about how you can use time tracking software to make project cost estimates with a high degree of accuracy.

Most companies, most departments, most people are really terrible at project estimation…How long is it gonna take me to complete this project. You can use time tracking technology to solve that problem with a very high degree of accuracy.

How do we do that? We take a really close look at how we’re gonna do project estimation using time tracking. First of all, you go get four or five projects that are of similar nature and you get people to track their time very carefully on those projects, breaking their time into phases – requirements and specifications, design, coding, testing, debugging, documentation.

You got your five projects and what you figured out is that the very first phase of the projects, there’s some percentage that for your company, for those kind of projects, the standard percentage that your people are spending on that first phase of the project.

Now, along comes project number six. And project number six we just spent fifty hours doing the requirements gathering. We know that we always spend about five percent of our time on the requirements phase. So now you have a metric. You can figure out exactly how much time it’s gonna take you to do any project.

Now you cross-reference that with your other more traditional estimation methodologies. There’s three methods: the time tracking method that I mentioned with the “how much is the requirements phase as a percentage of the overall thing.” There’s the “ask the expert” method. The third estimate technique is, based on some physical aspect of the project. So, if we’re building roads, how many miles of roads are we talking about. If we’re building bridges, how long is the bridge. You take those metrics, and to come up with a methodology for turning that into a number of person hours. None of these takes a lot of time to do. You always have to do the requirements phase of the project before you get started anyway, and that’s the right time to do the estimate. Once you have the requirements, then you can do an estimate.

There’s three ways to estimate the size of a project. One is what percentage are the requirements phase normally of the overall project. Method two is to ask an expert. And number three is, some sort of lines of codes count or miles of road built or the size of the building or how many things…some sort of physical aspect of what we’re building here. Triangulate those three things and you come up with a great answer, and now, because you have an estimation capability that’s based on actual historical data, you’re gonna be able to crush your competitors, make ten times more money than all the other people out there, so that’s the story.

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Journyx helps you track time for projects, payroll, and more. Learn how Journyx can help you use time to your advantage in your business.