Project estimates, why are they so wrong? London Olympics 2012

There is a lot of press space being given to the 2012 Olympics here in London – saying that the estimates for the games “has quadrupled”.

Now I am NOT going to enter into the debate as to whether the costs have increased or even by how much. However, what I will say is that we are generally really poor at estimating.

Research shows we suffer from OPB….optimistic planning bias. What does this mean? We think we can deliver a project of 40 weeks for example in 20 weeks. (For those that want to get hold of the paper see ‘Exploring the “Planning Fallacy”; Why People Underestimate Their Task Completion Times; Buehler, Griffin and Ross. Journal of Personality & Social Psychology 1994 Vol 67 No 3, 366-381)

So what can you do about it? Here are a few brief ideas. Do let us know of ones you may have

1) if you are a senior manager avoid giving out end dates for projects (or even business as usual activities) until someone has worked through how long an activity will take. We have seen too many times deadlines given which are not only unachievable but completely de-motivating. Once worked out, you may well recognise that more resources (money?) will be needed

2) spend time thinking through and discussing estimates. Sound crazy? Look at the Delphi Technique used in industry today. More realistic estimates are produced by discussing in groups the estimates for the whole project, stages or even individual tasks. To find out more, type Delphi Technique into your web browser.

3) ask yourself how confident you are of hitting the end date or the budget, or both. During some recent project management training events we asked participants how confident they were of achieving both the end date and the budget. There were some who gave appalling figures – quite a few said 10% confident, some around the 20%-25% mark with the majority in the 50%-60% bracket. Of the 35 people we asked, I would say there were only around 5 who said they were over 80% confident. If you are not confident of hitting the end date or budget (aim for 80% level of confidence) then what are you going to do about it?

4) find out who else has done this type of project before and get estimates from them (after asking them how realistic they were)

5) end of project reports – scour them for some feedback on estimates, how accurate were they?

6) Think about estimating as a skill. Don’t forget that in the building trade they employ estimators!

There is no doubt the Olympic estimates issue will rumble on. Make sure that your projects do not suffer the same fate

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4 Responses to Project estimates, why are they so wrong? London Olympics 2012

  1. Shaun says:

    Another Wembley? (Another Millennium Dome even?). Whichever way you look it’s another monument to ineptitude in modern Britain. In Germany, the Allianz stadium was completed in time and on budget: (http://www.epigram.org.uk/view.php?id=766).

    Have the right people received the right training / education in project management for the purpose? Who decides these things? Perhaps the same people telling you there has been a budget overrun, therefore the investment earmarked for training will have to be cut. It’s usually among the first of the cuts to be announced in an organisation. What makes people think that a shortfall will be recovered by people with the same thinking and skill levels that contributed to the problem in the first place?

  2. Ron Rosenhead says:

    Thanks for your comment Shaun. You make an interesting point:

    “It’s usually among the first of the cuts to be announced…..” We know this to our cost!!

    Many people have not received any training (including estimating!) but are engaed in key organisational projects. Hardly surprising the results are poor!

    Of course, senior managers must shoulder some responsibility…that is the subject of another Blog!!

    Ron Rosenhead

  3. Craig says:

    Great tips.

    Another thing to remember is that bottom-up estimating from very detailed work items often reveals complexity where top-down approaches don’t.

    Excellent point on the benefit of group (or socialised) estimates over indiviual ones.

    Cheers
    Craig
    Better Projects

  4. Ron Rosenhead says:

    Craig, thanks for this.My concern is that the process of estimating is not taken seriuosly enough.

    Blogs, training ebooks etc will all help.

    Many thanks again

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