What Is Effort Estimation In Project Management?

Simply put, effort estimation is the process of estimating how much effort your project will take to bring to life. It is expressed in terms of person-hours or money.

Lena Software

06 Sep 2022

Solid effort and cost estimations form the basis of a successful project. They facilitate planning how the project will progress and how your team will work on it. The estimation you make can help ensure a smooth and organised project or lead to a complex and tiring one.

In our previous blog, we explained the different elements of cost estimation. In this blog, we will explore why effort estimation is essential and how you can make a realistic estimate of the effort required to complete a project..

What Is Effort Estimation?

Simply put, effort estimation is the process of estimating how much effort your project will take to bring to life. It is expressed in terms of person-hours or money.

A realistic effort estimate requires you to have a clear understanding of certain elements of the project:

The purpose and scope of the project (If working with a client, what are their expectations?)
What needs to be done to achieve it
What resources should be allocated
Timeline

Major project estimation techniques

1. Top-down Estimate

Once more detail is learned on the project's scope, a top-down estimating technique assigns an overall time for the project and divides the project into parts according to the work breakdown structure.

For example, let’s imagine a project that must be finalized in one year. By fitting the scope of the project on the timeline, you can estimate how much time is available for each activity that needs to be performed. The top-down method is best applied to projects similar to those you have completed previously. If details are sketchy or unpredictable, the top-down approach is likely to be inefficient and cause backlogs.

2. Bottom-up Estimate

The bottom-up method is the opposite of top-down. It approaches the project as a combination of small workpieces. By making a detailed estimate for each task and combining them together, you can build an overall project estimate.

Creating a bottom-up estimate usually takes more time than the top-down method but has a higher accuracy rate. However, for the bottom-up method to be truly efficient, the project must be separated at the level of work packages.

3. Expert judgement

The expert judgment technique requires consulting the expert who will perform the task to ask how long it will take to complete. This method relies on your trust in the expert's insights and experience.

While it may seem like the most accurate estimation method, there are two points to consider:

The expert's estimates need to be objective. Estimates that are carried out very positively and overlook possible disruptions can create difficulties in meeting deadlines.
You can only get an accurate answer to specific questions. Detailing the task description, framing it, and clarifying the requirements will allow the expert to understand the task fully and provide an accurate estimate.

4. Analogous Estimating

Analogous estimating is a technique for estimating based on similar projects completed in the past. If the whole project has no analogs, it can be applied by blending it with the bottom-up technique. In this case, you compare the tasks with their counterparts, then combine them to estimate the overall project.

5. Three-point Estimating

Three-point estimating is very straightforward. It involves three different estimates that are usually obtained from subject matter experts:

Optimistic estimate
Pessimistic estimate
Most likely estimate

The optimistic estimate gives the amount of work and time that would be required if everything went smoothly. A pessimistic estimate provides the worst-case scenario. The result will be most realistic when the two are averaged with the most likely estimate.

Although it is similar to the expert judgment technique, the negative effect of the subjective point of view is prevented by not relying on just one estimate.

Conclusion

Effort estimates are just estimates and you cannot expect them to be entirely consistent with reality. Developing your estimating skills and technique takes place over the long term, and requires you to understand and use data efficiently. An analytics tool will help track and analyse projects and assist in making more accurate effort estimations.

MaestroCR enables you to connect with your customers, stakeholders and team to simplify project management processes. Divide projects into tasks, add developers, partners and contributors, and assign deadlines. This allows you to manage your project transparently and efficiently. You can access past estimations that have been met or are overdue in just a few clicks and use data to speed up your process and make more accurate effort estimations.

Sign up free to MaestroCR to discover how to improve your project estimation process.