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The black art of estimating IT project costs

To estimate a project's expense, you need to understand and plan it

By Bob Lewis, InfoWorld, 09/19/12

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Last week I received a question about project estimation. If you're part of a next-generation IT group, project estimation is a critically important capability. If, on the other hand, you're part of a more traditional IT group, project estimation is a critically important capability.

For that matter, if you play a role anywhere in any sort of business that isn't entirely moribund, project estimation is ... that's right.

[ Find out the 10 business skills every IT pro must master, beware the 9 warning signs of bad IT architecture, and steer clear of the 12 "best practices" IT should avoid at all costs. | For more of Bob Lewis' continuing IT management wisdom, check out his Advice Line newsletter. ]

For more than a year, Advice Line has focused on next-generation IT: what it is, how it differs from traditional IT, why the differences matter, and how to make it happen.

But every so often I get a question worth sharing that doesn't have a next-gen-IT focus. And so, this week, we resurrect the old Advice Line question-and-answer format.

Sensei,

I was re-reading "Bare Bones Project Management" because I just started a new project.

The first thing I was asked: "How long do you think this will take?"

On page 20, your footnote says, "The answer lies in a black art called 'Project Estimation,' which is outside the scope of this book."

Have you ever written anything about this "black art"? Apparently "I have no idea" wasn't a good enough answer!

— Grasshopper

Grasshopper,

Jeez, quote a guy's own words back at him? Words in a footnote, no less?

I've written a bit about estimation, but not very much. It remains, to me, a black art. When I have no choice, here's how I go about estimating a project.

First and foremost, I inform the questioner:

  • I won't know the answer until I'm in a position to develop a work breakdown structure that goes at least three layers deep.
  • I'd rather not provide a SWAG (scientific wild-ass guess) because of the rule of corporate numbers, which states that any number uttered within anyone else's hearing is immediately chiseled into a slab of granite, there to be enshrined forever as an absolute commitment.
  • I also need to know whether my estimate should include or exclude an allowance for contingencies.

The rule of corporate numbers
Understanding the rule of corporate numbers is vitally important to anyone hoping for a career in management, project management, or for that matter, any professional responsibility. The question, "What will this cost?" asked when all you know is the name of a project, is a landmine. If you step on it, shame on you because you've ignored something said by Isaac Asimov years ago: "I can answer any question, so long as you agree that 'I don't know' is an answer."

If a guy as brilliant as Isaac Asimov was comfortable answering, "I don't know," you should be too.

Also, a phrasing tip: "I don't know" is more diplomatic than the more satisfying, but also more career-limiting, "How on earth should I know?"

In any event, the rule of corporate numbers means you should only utter a number after you're confident you can meet or beat it. To do that when estimating projects, you have to be in a position to plan the work -- you must be able to break down the work into tasks take no longer than a week, described as an outline about three or four levels deep (the work breakdown structure). Once you have that, you can probably estimate each task with a reasonable degree of accuracy.


For more enterprise computing news, visit InfoWorld. Story copyright InfoWorld Media Group, Inc.

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