“Gosh, I just LOVE it when my projects go over budget and run super late!” said no one, ever.
Shelling out extra money and squeezing in extra time is bound to make any entrepreneur cranky.
Now, since we’re all grown-ups around here, we’ll have to agree that sometimes, things just go sideways; we simply can’t plan for every speed bump and miscalculation.
But we CAN train ourselves and our team members about project cost estimation for both timelines and budgets, as accurately as possible.
Here are 5 essential steps that will lead you toward reliable project cost estimates, and away from endless crankiness!
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Project cost estimation step #1: list out tasks
It’s absolutely impossible to know how long a project will take or how much it will cost if you can’t see its full scope.
So list out all of the components from start to finish, including estimates for how long each task will take and any associated costs. Total up both columns, and you’ll have a great starting point!
Make a habit of doing this before you launch any new or long-term project with your team.
Project cost estimation step #2 : review similar projects
Why reinvent the wheel? Review past projects that are similar in scope, taking note of overall costs and doing your best to reconstruct timelines.
Then give some thought to how this new project will differ:
- Do you have new or different team members working for you?
- Is the audience the same?
- The goals?
- Any new tools in the mix to make processes more efficient?
And then adjust your project cost estimations accordingly.
Project cost estimation step #3: consult with your team
Please oh please don’t make the mistake of ballparking these things alone!
Talk with your team about their schedules and time estimates, and check in with them on budgets.
- What do they estimate in terms of time and cost?
- Are they basing their projections on recent projects or older ones?
If either timing or expenses seem high, discuss ways to shave off hours and dollars.
- Are there processes that could be skipped or condensed?
- Different or less costly tools to be used?
Get team member input and you’ll have a much easier time keeping projects on track!
Project cost estimation step #4: schedule in padding
Even the strictest bosses add a little wiggle room to both budgets and timelines, and you should, too!
Adding few days and a few dollars to every project means less scrambling and stress for everyone, clients and customers included.
Never schedule tasks down to the wire, and never budget too tightly.
Always allow for overages: add 25% to your total estimate to cover any unforeseen expenses, and at least a day or two to give your team some breathing room.
Project cost estimation step #5: tracking time
The best way to estimate costs and timing on future projects?
Ensure you’re capturing costs and timing on current projects.
Make sure your team is always tracking their time accurately. And that means not just hours worked, but hours worked on which tasks. Many remote teams use a time tracker like Toggl to create detailed reports outlining how time was spent.
I can’t guarantee that these 5 steps will keep you from EVER going over budget or off timeline … but I can guarantee they’ll keep you and your team much closer to hitting the marks!
PS. Want to learn how to create a project management plan that will help you manage costs, resources, and client expectations for a more profitable and efficient business?