Overestimate or Underestimate?

While trying to provide estimate for a new requirement / project, it is always an enigma whether to overestimate the requirement and face the risk of not getting the project or underestimating the requirement to get the project.

My thoughts, don’t intentionally underestimate (to get the work). The outcome and the penalty for underestimation is more severe than the result / outcome for overestimation.

From project management view, the biggest outcomes of intentionally underestimating requirements are:

  • Reduced effectiveness of project plans
  • Reduced chance of on-time completion
  • Losses involved in terms of cost
  • Disturbed Client relations or lack of Client satisfaction
  • Loss of overall goodwill

Time spent on proper estimating helps in:

  • Recognizing a mismatch between the requirement / project’s business target and a requirement / project’s estimate
  • Gives you chance to justify (to the client) the cost of the project (why is it on the higher / lower side?)
  • Assessing valuable risk information that the project might not be successful
  • Take corrective action early, when it can do some good

It also helps the over all project with:

  • Improved status visibility
  • Higher quality
  • Increased credibility for the development / support team (and of course the company)
  • Clarity on various risks involved (at various stage)

The ideal goal should be to address concerns about overestimation through proper planning and control, not by biasing your estimates (just to make the client happy initially) . Quiet a few project managers don’t like spending time on proper planning and estimate and most of them do not have a standard method to do so….

Quote of the day:
God is not dead but alive and well and working on a much less ambitious project. – Anonymous


December 21, 2007 · Rahul Desai · No Comments
Posted in: Project Management, Software Engineering

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