Estimating project time and cost

Project cost and timelines are usually the hottest topics when a project is initially rolled out. Let me start by stating I am no Project Manager nor pretend to be, but I have lead and assisted numerous projects throughout my career. One of the burning questions my managers have seem to always ask is “when will I have this completed and how much is it going to cost?” From my experience he was always more concerned with getting the project completed on time than cost. Not to say that cost was not important, as long as the expenditures were in reason. In manufacturing as in any other industry the customer comes first and is the main focus of everyone in the company. As we know estimating cost can be either from the bottom up or the top down. In my opinion bottom up approach is preferred because it is usually the project manager or project engineer that will be see the project through. I know in my field of manufacturing you don’t have top level managers on the production floor. They are knowledgeable but operations is a completely different world than engineering, sales, or marketing.

As I mentioned earlier completion time and meeting deadlines is what top managers are looking at when projects are in process. I used a critical path analysis chart to help with my estimation for completing a project. The project consisted of relocating a family of speakers that logistically makes since to assemble on the west coast. Considering most of the raw components we buy for this speaker are from the west cost and the finished assembly is primarily sold to customers in that region. We decided to relocate this product family to the Anaheim plant. So this project from a operations stand point consisted of transferring all the purchased and manufactured components from Illinois to California and setting up a work cell.  So the critical path chart made a lot of since for this project because so many part numbers needed to be transferred, equipment needed to be purchased, testing equipment needed to be fabricated, along with standard work and training documents.

So when I had my completion date estimated and total cost of all invoices for this project. I presented it to my manager and his manager. Unfortunately the project was not completed until two months after my estimation, for reasons that were out of my control. from an operations stand point everything was ready to go. My manager understood that and knew I had completed all my task. All Project managers struggle with the same dilemmas and that is estimating how much a project will cost and how long will it take to complete the deliverables. I wanted to see what project managers in the field had to say on this topic so I visited the PMI website. Click on the link below to see what they had to say. Also feel free to leave a comment on your experiences with estimating.



Read The Future

Can anyone really read the future? We all know that this is not true but what I shall talk about relates to the subject hugely.


We learned a bit about forecasting, its importance to organizations and some of the different methodologies used, should those be qualitative or quantitative. I work as a business analyst and my company is in entertainment and events management and I am going to go briefly on how we utilize forecasting in our business.


We learned that applying forecasting techniques is easy once you know which method to choose. In my company we have a mixture of products. Some of which existed for years, some have been renovated and others will be introduced in the near future.


For products that have been in the market for a while we utilize the historical data to recognize patterns on evenly spaced periods. By looking at the growth rates and applying a moving average method we have been able to project demand and sales figures fairly.


With regards to renovated products we look at the elements our clients liked and move the product into that direction. The only way to get our hands on such information is by doing consumer market surveys. Make sure before you go ahead with the process that your sample represents your entire market. We have been in a situation where we projected huge revenues from a recently changed product. What went wrong is that the proposed changed came from a key client, a change the rest of our clients did not like and we ended up changing the product back.


The hardest of all in my opinion is forecasting a new product. I have learned from experience that the best estimates will always have a large percentage of error in this case. If you forecast less and the demand is more, you end up losing clients. If you forecast high and you end up not selling much then you have wasted resources that could have been better utilized elsewhere. What we do is that we relate the new product to another that has similar characteristics. Surprisingly, similar products will have similar market trends and growth rates. If it is a product we have no similar to we seek information from other companies, business professionals and the internet to utilize the best forecasting techniques.


Two things my company does after each forecast. One is we will do manual adjustments to the results. I know from the class that this step is the sales force composite. We will ask the heads of the department about what they think about the numbers. May be they have large number of clients lined up to buy or may be our biggest purchaser is not interested in buying anymore. The second is to look at the state of the economy and how other companies are doing and estimate their spending.


Which is the best forecasting technique? It all depends to me.