The three-point estimation technique is simple yet can be very powerful when planning a project for a client. 

Planning and estimating a project

When it comes to planning and evaluating a project, the three-point technique is much more efficient than wild guesswork. When planning a project, the estimation phase should happen early on, when there are a lot of unknowns and uncertainty is high. 

“The ‘three-point’ estimate is a simple technique but one of the most powerful and efficient you can use. Try it out for yourself.”

how to estimate a job

A three-point estimate can give a good indication of the cost, duration, and effort that will be required, without tying anyone down to the last cent. For example, if I’m thinking of implementing a new CRM system, and come up with an early estimate that says it will cost somewhere between €20,000 and €50,000 – that may well be all the information I need if my budget is only €5,000. There is no reason to get the exact figure because I know I can’t afford to do the project.

“We create a three-point estimate for each package, where we estimate the amount of effort (measured in staff days or staff months) for each line item.”

How long is a piece of string?

When my company takes on a new IT project, we will break out that project into some components, or work packages. Then we create a three-point estimate for each package, where we estimate the amount of effort (measured in staff days or staff months) for each line item. Sometimes, the pessimistic number can be high (“how long is a piece of string?” is the phrase often used). In this scenario we have to make some assumptions – we have to assume that the string is one metre long, for example. Then we estimate how much effort is required for that piece of work. However, what is critical is that we write down the assumption that was made – i.e. we write down “assuming the string is one metre long”. We then share our estimate with our client; we also share our list of assumptions, and the customer can confirm our assumptions are correct or, indeed, if the string needs to be stretched. 

“It is useful when estimating to get a few people involved, precisely so they will remember all the different aspects of the project. ”

 

Don’t forget all the elements of the job 

Other things to note when estimating is that there is a tendency to forget ancillary activities. For example, it is very common for software developers to include the technical tasks, like defining the system requirements and the architecture and writing the software. They may even remember to include an estimate for the testing. But they will often forget to include the effort to deploy and support the system, to create any documentation required by the system users, to deliver training to those users, and the time needed to project manage the whole thing.  

how to estimate a job

It is useful when estimating to get a few people involved, precisely so they will remember all the different aspects of the project and help build out a comprehensive estimate.

The final step is to effectively communicate your three-point estimate. Some clients will just want to see a single number, but it is more useful to walk a customer through the three-point estimate. It will help them appreciate that there are uncertainties and that perhaps they can make some decisions (or set constraints) that will contribute to reducing the effort and cost of the project. This allows the client to see a range of possible outcomes and lets them see the most uncertain – and therefore the riskiest – parts of the project. 

The ‘three-point’ estimate is a simple technique but one of the most powerful and efficient you can use. Try it out for yourself and watch the success rate of your projects soar.

Article by Pat Lucey, CEO, and co-founder of Aspira

Images from Shutterstock. 

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