One post tagged with "project planning"

Want to cut to the chase and download a project cost estimation model you can use right away? You’ll find a link here.

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Let’s start with a definition. An IT Cost Estimate is a point in time view of the resources and estimated costs associated with a project. This guide gives an overview of the process with focus on what you need to know from a Solution Architect viewpoint.

There are many elements to the cost of a project. Some obvious, others less so. For example, decommissioning is an element that can be often overlooked. Both from a financial viewpoint and planning for it within a design.

Cost estimation can be done using a range of techniques. From a spreadsheet created internally by a company or team to any one of a dozen established formal methods. Some sectors may insist on adoption of a particular type. That being the case this guide will be of less value. This summary will focus on the approach of using a spreadsheet and keeping things as simple as possible.

What is a cost estimate?​

A stupidly obvious sounding question. However, a recap will ensure we’re all clear. A cost estimate, summarises a complete view of the costs associated with an project. Complete meaning from inception to decommissioning. There are a lot of elements. Many of which may not be obvious.

Why does it exist?​

Mainly to aid with obtaining funding for a project. Some projects have drivers such as legislative change and will likely be done at whatever cost. Others will be measured against return on investment and compared with other candidate projects looking for funding.

They also help with resource planning but the focus is mainly financial.

Who uses it?​

- Sponsors - Call this group whatever you will. Ultimately there’s a group of, or better still a single person, responsible for the project. Whether it goes ahead or not. When and if it’s stopped.

- Programme Manager - Uses the contents to inform project sponsors of costs at various stages. It’s common for this role to have different titles.

- Project Manager - Alongside, or reporting to, the Programme Manager the Project Manager forms a team which is responsible for forming project costs. The Project Manager will work with other team members to a) identify resources required, b) collate estimates from those resources

- Solution Architect - Now we come to the most important input of the team. :) More seriously, the multidisciplinary nature of the role combined with a breadth of experience across technical and non technical areas means the Architect is well placed to understand a) who is involved, b) what they will do, c) for how long, d) unknowns of project delivery, e) risks etc.

There are others including Portfolio Managers looking after a range of projects within a department or division.

How is it done?​

It’s useful to remember a cost estimate is typically not a one time exercise. It is done at various stages of a project. Most obviously at the start but can be done at subsequent stages. Especially if future funds release is linked to existing estimates.

Generally the steps involve:

1. A project idea is formed. Some early analysis done around requirements and provisional solution ideas.
2. The requirements and solution inform the types of resource involved, technology implementation, risks and general level of comfort with knowns / unknowns.
3. The Solution Architect, with others, completes the estimation template
4. The estimate is peer reviewed, refined and agreed

Feedback loops​

Comparing the initial cost estimates of a project with the final costs provides useful insights that improve accuracy. Identifying areas of improvement and taking that learning into future estimates is the most efficient logical means of improvement.

A project team often disband after completion. What’s needed is the knowledge around cost estimation to transcend each project. Within some organisations that role is fulfilled by the Cost Estimation Team.

Cost estimation team​

Organisations that value cost estimation and do it well often have a dedicated team focused on this task. Typically a Cost Estimator will be assigned to your project. They will supply estimation models, help with completion of them and revisit estimates at various points of the project.

Involvement vs time​

Some resources have little to no involvement depending on the project stage. For example, testing resource doesn’t add value at the very beginning of a project. Yes, it’s useful to have early sight of things but in the case of testing resource when little to nothing is known about the solution not much can be added from the testing viewpoint.

Involvement from roles such as the Solution Architect decrease over time. The same goes for business analysts.

Estimates improve with time​

It’s common to do multiple estimates for a single project. Accuracy ‘should’ increase over time. In most cases it’s sensible to start with a high contingency built into cost. As much as 40%. After the discovery period more is known and it will be possible to revise the estimate. Now that could mean the costs go up or down BUT it’s common at this stage for there to be less unknowns so the contingency goes down. Say to 20%.

Key Takeaways​

References​

• UK Gov Cost Estimating Guidance - Focus on infrastructure more than technology but plenty of technology relevant principles.