Principles of Estimating

Estimating is a very poorly understood topic, it is a discipline that is expensive to do well and even more expensive to get wrong.
[ See the complete free course here – flash-player or here-html5 for Apple devices]

A few simple principles and practices untangle the Gordian Knot

  • Simon’s Estimating Principle Number One: Accuracy is a binary concept meaning “is correct” versus “is false” (the use of “degree of accuracy” as used in everyday speech is best replaced with use of ‘degree of precision’)
    • Degree of Precision is a concept that allows expression of in-exactness I.E. uncertainty IE unknowness IE risk
  • Simon’s Estimating Principle #Two: Estimating includes two roles (even if the same person fulfills both) Producer (technician) and Recipient (Investor)
  • Simon’s Estimating Principle #Three: it is the producer’s duty to be accurate at all times (and failure to be accurate is INCOMPETENCE and easily avoided with wide ranges – lower precision)
  • Simon’s Estimating Principle #4: It is the recipient’s duty to assess if the estimate is precises enough for their decision making needs and to pay/ wait/ enable re-estimating with the inputs required to increase precision if worthwhile
  • Simon’s EP#5: Cost and Duration are CALCULATED from the estimate’s factors each time a range of values is required.
    • Duration equals (Work / (Resource Availability & Productivity))
    • Cost = Fixed costs + Variable costs + Overheads. Variable Costs = (Duration or Quantity * Unit Rates)
  • Simon’s EP#6: Cash-flow, budgeting, cost of capital, when costs are committed, incurred, settled etc are a different topic but sufficiently related to need joint consideration
  • Simon’s EP#7: An estimate is always a two or more point range. The minimal case is most Optimistic and most Pessimistic with “Because… and Assuming…” to explain the differences. The pragmatic case adds individually Most Likely to facilitate assessment of confidence levels at specific values
  • Simon’s EP#8: An estimate is a package of factors* that yield numbers each time they are examined. Sometimes the number(s) are stable, sometimes they trend over time
    • The package contains one or more scales (Eg Meters of cable and number of connections) plus
    • a rational for placing the estimate on the scales (Eg Run cable from power-source to light fitting and to switch) and
    • conversion factors and known quantities (Eg Cable draw-install rates are 600m per hour vertical and 60m/hr through ceiling voids and 10m/hr floor voids & in walls, Connections are 12 minutes per 240v non-distribution panel connection)
  • Simon’s EP#9: The driving factors of an estimate will ALWAYS trace back to the Standards in the Quality Management System via the Deliverables* in the Product Breakdown Structure and the Work* in the Work Breakdown Structure
    • (*”Deliverables” covers Results, Impacts, Products, Outputs, Changes etc created or acquired by the development phases of an investment. “Work” includes Task, Job, Activity, Sprint, Phase, Stage, Iteration, Work-Package, Planning-Package, Episode, Project, Program, Biennium etc that bounds activity with a recognizable ‘Deliverable’)
  • Simon’s EP#10: When ‘Work (is) In Progress’ (WIP) then (Actual ACHIEVEMENT / Planned Achievement) and (Actual Achievement / Actual Cost) yield estimating correction factors to be applied to remaining work for a “Forecast To Complete”
    • Some people call these metrics a “Performance Index” some call the rate of achievement “Velocity”
  • Simon’s EP#11: Estimates are MORE used, more useful and more important and become more precise during work’s execution rather than during planning
  • Simon’s EP#12: Progress tracking *IS* the process of estimating. Sometimes the re-estimate requires changing the structure of the package (SEP#8), some times the coefficient’s of the erms and sometimes just recalculation with reduce ‘quantity_to_go’
  • Simon’s EP #13: Each different estimating Method and Approach and Tool and Technique has strengths and weakness that make them more or less applicable in different circumstances.
    • For example a ‘Top-Down and Analogous Single Point estimate’ is fast and cheap and available early-on but unreliable and o little forecasting value during execution while a ‘Bottom-Up and Parametric Delphi based Multi-point range estimate’ is slower and more expensive to create, only available after pre-requisite work has been completed but is more reliable and suitable for creating forecasts during execution.
  • Simon’s EP#14: Estimating improves when participants know the principles, know that accountability accompanies inaccuracy but not imprecision, are incentivised on precision (not speed of pronouncement), are within a feedback loop that links pre-WIP estimate with WIP-re-estimating and post-completion creation of historical data for future estimates


Our Masterclass in Estimating [ See the complete free course here – flash-player or here-html5 for Apple devices] equips participants with knowledge of Methods, Approaches, Tools & Techniques to break the stupidities of estimates that are padded with meaningless ‘protection’, arbitrarily manipulated at varying levels of the organization’s management and often entirely meaningless. Ability to estimate is founded on the principles above and a foundation skill within #pm_ngt


Logical Model provides B2B training in project based change & B2C in PRINCE2 & PMP exams. Our B2-B training and mentoring in #pm_ngt explains the flexible approach and structured steps plus matched tools and techniques that are relevant2reality™ across the end2end™ investment time-line and top2bottom™ span of decision making within all corporate change.
#pm_ngt has a pragmatic, non-exam focus on value to the business’ shareholders
#pm_ngt’s key differentiators are:
1) Projects must work to and from the investor’s time-line – that means right to left planning of strategy, left to right planning of tactics and integration of the two and it means ‘deliver the value’ not ‘follow the process’.
2) Management must delegate and escalate with understanding of what both are – that means cascade goal + constraint + authority + a helping hand + resources, it means receiving and acting on escalations – Read more here
3) Use well know standards pragmatically – It means set-aside exam stupidities and use the tools and techniques of D4(r) to define the future_state_Business_As_Usual (fsBAU), use PRINCE2(r) to create a control structure for decision making and use PMBoK Guide(r) tools & techniques to build baselines, monitor performance and respond to achievements, problems, issues and risks, it means integrate project management framework and product life-cycle to accommodate any development pattern whether optimized for agility of development or whole life life-cost-of-ownership
To find out how to tailor a delivery for your organisation’s needs contact pm_ngt@logicalmodel-dot-net or call +44 (0) 84 52 57 57 07 and look here