Accurate estimating is crucial for your business. As a business owner or manager, getting things done on time and within budget are likely top-of-mind.\nThis requires you to think through how much a project will cost, how long it will take, and when it will be finished by, on an ongoing basis.\nFailing to estimate a project and deliver as planned risks damaging relationships, losing out on revenue, and your reputation. It’s not something any company wants.\nOn the other hand, the right estimation techniques lead to you forming stronger relationships, securing future work, and growing your business.\nEstimating a project properly can be a difficult task.\nYou need to have a solid understanding of:\n\nThe potential scope of work\nThe estimated timespan of the project\nWhat resources the project requires\nThe project cost\nThe project risks that could keep it from being delivered on time\n\nUsing different project estimation tools or a project estimation template, you can easily work out the key elements of the project and form a concrete project plan.\nDoing this will allow you to properly brief your team, stakeholders, and client, as well as help you to keep track of your progress throughout the project, no matter what stage it’s in.\nThis article will cover:\n\nWhat is project management estimation?\nFive key project estimation techniques\nThe best tool to use\n\nWhat is project management estimation?\nProject management estimation means looking through all available data to propose the time, cost, and resources needed to complete a project. Typically, the project deliverables for estimating include a scope of work document, timeline, resource overview, cost estimates, and risks.\nLet’s look at each part of an estimate individually.\nScope of work\nEstimating a project’s scope of work means laying out what tasks, deliverables, and dependencies are all built into the project.\nThis covers all aspects of the project from technical development to catch-ups and calls. You’ll even note how many rounds of revisions are permitted so that there’s no question later on.\nAccurately estimating what the project will actually involve will help you better predict how much it will cost, how long it will take, and what potential roadblocks may slow things down.\n\nProject timeline\nA straightforward timeline covering all aspects of the project and the scope of work is essential. This should show when different parts of the project start and finish, which parts depend on other parts, and when each milestone will be finished.\nThis might look different in Agile project management than it does for Waterfall projects.\nResource overview\nHaving a clear scope of work and a timeline will allow you to understand exactly what the project requires when it comes to resources.\nA good project estimation will make it clear who will be involved in the project (staff, contractors, vendors, or suppliers), what technical or other resources you will need (manufacturing, printing, shipping, etc.) and how these relate to the overall project.\nProject cost\nFor many, this is the most important part.\nLooking at the scope of work, timeline, and resource requirements will allow you to accurately forecast the project cost. With all key elements of the project mapped out, you’ll be able to clearly estimate the overall cost range.\nEven better than all this, though, is historical data related to past project costs. Dig into previous projects for similar clients to compare and adjust as needed. The more accurate data you have, the closer project estimates will be.\nRisk factors\nAfter gaining a complete overview of the project, it’s time to identify the risk factors and potential roadblocks.\nWhat could derail the project, and how do you avoid it?\nThis step should cover all aspects of the project including potential roadblocks with resourcing, scope of work difficulties, and budget constraints.\nFive key project estimation techniques\nThere are several project estimation methods that all lead to success, and each has its own benefits.\n1. Three-point estimating\nThis project estimation method takes a mathematical approach to estimating.\nThree-point estimation allows you to create a probability distribution with a range of three outcomes based on very little data or information.\nUsing past experience if possible, or best guesses if the project involves unknowns, an estimate range can be calculated. This range includes:\n\na = the best-case outcome or estimate\nm = the most likely outcome or estimate\nb = the worst-case estimate\n\nIf you are unable to estimate yourself, call on a key stakeholder within the relevant team or department to help you calculate using more concrete information.\nUsing these 3 estimates or outcomes, perform the following simple mathematical calculation to work out the weighted mean and the standard deviation. The standard deviation is used to estimate probabilities.\n E = (a + 4m + b) \/ 6\nSD = (b − a) \/ 6\nThree-point estimating allows you to be far more accurate with your project estimations than simply asking your teammates or colleagues to provide an estimate for the time a project, deliverable, or task will take.\nThink about how this usually happens.\nA project manager asks a dev team lead to estimate how long an aspect of the development will take. The team lead will usually provide an inflated figure that has both room for delays and unexpected costs.\nAsking for a range of forecasts and then calculating the mean and the standard deviation allows you to be far more accurate with your project estimations.\nMore accurate project estimations mean more successful projects.\nInterested in learning about Agile estimation specifically? Visit our page here.\n2. Top-down estimation\nTop-down estimation is the most common method of estimating projects. It starts by taking a broad view of the project and then breaking it down into smaller chunks.\nThis project estimation method works well when a project is at an early stage or where there are many unknowns. It can be useful for providing a projection to determine viability or to start the initial scoping.\nTop-down estimation also offers the ability to be more or less precise with project estimation. This makes the approach better suited to different needs than other project estimation methods.\nFor example, a top-down estimate may be useful when explaining a project to a C-level stakeholder who is more interested in the broader picture than the nitty gritty.\n3. Bottom-up estimation\nBottom-up estimation, as expected, is the reverse of top-down estimation. When you have a clear idea of fine details of the project but are not entirely sure of the broader form of the project, bottom-up estimation allows you to work out an estimation of the entire project.\nStart with the finer details of the project, pull in the team to help estimate those details, and then roll them up to the project as a whole.\nThis can be a very good way of forecasting and estimating the total cost of the project as it will allow you to start with a true understanding of how much project elements actually cost. However, it is more time-consuming.\n4. Analogous estimating\nIf you are experienced at executing a project just like the one you are looking to estimate, this project estimation method can be extremely useful.\nUsing a previous projects’ scope of work, resource schedules, budgets, and timelines, you can prepare a very accurate estimate of your current project.\nHowever, remember to adjust your estimations based on current scenarios and only to use the actual realized information rather than previous estimates, which may be inaccurate.\nEstimate using actualsTrack projects and budgets better with HubstaffTry it free\n5. Parametric estimating\nParametric estimation is an extremely precise way of estimating a project. Whether you’re looking at timeline, cost, or resource requirements, parametric estimates are more accurate than other forms of estimate because of how they are calculated.\nParametric estimation uses the costs or timescales of individual project elements to estimate the overall cost or timescale of a project.\nA construction project, for example, can benefit greatly from parametric estimating.\nLet’s say your project is the construction of a 12,000 sq. ft. building and you know the average cost of constructing 1 sq. ft. is $100 plus or minus 10%. If the total construction area is 12,000 sq. ft. plus or minus 0%, then the total estimated cost of executing the construction is $1,200,000 plus or minus 5%.\nParametric estimations are typically accurate at scale or at high costs where it is more difficult to massively under- or overestimate a fixed cost.\nHowever, you need to be careful when properly estimating fixed costs using either previous experience or industry data. The source of your data must be accurate.\nParametric estimating should also take into account:\n\nEconomies of scale: Volume discounts may apply to certain aspects of the project, especially in construction, and this can dramatically affect the estimate\nRisk factors: These may be environmental, dependent on the time of year, or something else\nResource constraints: Parametric estimations are calculated using best-case scenarios that might not be possible in your project’s circumstances\n\nThe best tool for better project estimation\nNow that you have a better understanding of what project estimation methods exist and how to use them, you’re probably wondering about project estimation tools.\nProject estimation tools offer easy ways to properly plan out a project and then help guarantee its success. They do this by making project management easier, more efficient, and more effective.\nImplementing project estimation tools into your project management workflow will help you keep projects on track and deliver on time.\nHubstaff Tasks\n\nHubstaff Tasks is an Agile project management tool that offers advanced and dedicated project estimation tools.\nHubstaff Tasks allows you to:\n\nAutomate stand-ups and check-ins\n\nAllowing you to clearly identify roadblocks\nHelping you monitor project progress\n\n\nUse Kanban-style workflows to manage project tasks\n\nMeaning projects can be analyzed visually in seconds\nHelping you to monitor the project timeline and make improvements or revisions if necessary\n\n\nMake use of over 40 project templates\n\nAllowing you to draw on tried and tested project structures and speed up your project estimations\n\n\nImplement project Sprints\n\nDecide what’s the priority and how much team each task will take\n\n\nManage task assignments and team members\n\nAdd due dates, assign tasks, and more\n\n\n\nWhen combined with Hubstaff, you can track project hours and get clear summaries of costs. You can even add budgets to each project and see alerts as those limits are approached.\nAll of this data is helpful when it’s time to estimate projects in the future.\nStart estimating projects now\nNow you have a full view of how to estimate projects, what project estimates should include, what the best methods of estimating projects are, it’s time to get started.\nIf you closely follow the methods above and make sure to allow for risk factors, changes in circumstance, and resourcing issues, your project estimates will be clear, concrete, and easy to implement.\nCheck out tools like Hubstaff Tasks and implement methods like parametric estimation or three-point estimation for better forecasts and better projects.