How can we mitigate uncertainty about project estimation in the initial phase?
According to *Boehm’s Software Engineering Economics*, during the project initiation, estimates can be off by as much as 400%.However, in order to make the sale, account managers are expected to make on-the-spot estimates of the project duration. The result is that we end up with a number of unrealistic schedules which we are contractually obliged to stick to.The schedules tends to be underestimated, since there is a feeling here that if we quote too high, the project or the tender will simply be snapped up by another company.What strategies exist to mitigate that uncertainty? Are there standard contracts that sell an initial requirements extraction phase to better understand the requirements before making a long term estimate?
You can mitigate the uncertainty of project estimation by:
Using Bechmarking technique, which is predicting your future project cost comparing to similar projects in database. Taking into consideration project size, inflation rate and other price indices.
Using Bottom-up estimation technique, which requires more information about the project, then accumulating these prices from the bottom WBS (Work Breakdown Structure) up to the whole project.
Both techniques will be best applied when there is much information about the current project.
