One of the steps that is included in the closing of a project is to document your learnings from the project. This can help in estimating work for a similar project in the future. However, when there is no prior work to draw from, how do you estimate a project? Try some of the below steps.
Contingency planning is being prepared for the unexpected. For instance when it comes to cost, a contingency plan will allocate some additional funds in case the projected costs are over-run. If the costs are within the plan, then the funds can be returned to where they came from.
Costs versus budget should be balanced. A PM might be pressured to keep costs artificially low in order to fit a budget. When dealing with a new project that has no prior example to estimate cost from, this may lead to over-running the budget. Be honest in the budget about your expected costs. Adjust scope if necessary.
Assumptions can have a negative impact on a project timeline unless they are clarified. For instance, when you give an estimate for a certain task, such as coding a UI for a web application, you are assuming certain number of developers. You should be clear about the number of developers so there is no doubt about it.
Detailed work break down structure will help create more realistic estimates. For instance, when building a cloud application, don’t say “acquire public cloud account”, instead break that task down to comparing different public cloud solutions, trying a couple of them out, and picking one.
Common activities such as meetings, training, client feedback is even more critical in projects that have no precedence. Make sure you allocate sufficient time for these.
Accuracy is very important when it comes to making estimates. For accuracy, try the following guidelines:
Rough Order of Magnitude Estimate: -25 percent to +75 percent
Budget Estimate: -10 percent to +25 percent
Definitive Estimate: -5 percent to +10 percent
Risks can be an even bigger factor in unknown projects. Use a prototype if possible, since it will help in getting to know the unknowns. Also, have a risk mitigation plan that takes into account the unknowns by adding some extra slack in the project timeline.