What Happens When the Project Estimate Doesn’t Match Reality?

Posted on February 3, 2021 in Blog ,Improve Financial Management ,Increase Project Profitability ,Solutions360 by

There is widespread belief in the integration industry, that the most important measure for a project manager is to be ‘on time and on budget,’ and that a good project manager will make it so.

what happens when the project estimate doesn't match reality?But this assumes that the estimate is accurate.

Is this a familiar conversation in your integration business?

“Well, our estimates have to be good.”

“Why?”

“Because we always hit them.”

This would be all right in a world with perfect estimates, but what happens when the project estimate doesn’t match reality?

If you estimate a task at 10 hours, but it takes the technician 20 hours, instead of punishing the technician for taking 20 hours, you need to ask yourself, was the estimate accurate? Are there other circumstances which caused the estimate to change?

What caused the variance? That’s the information you’re after.

 

“If I don’t allow for variance, if I don’t reward the truth when there is a variance between what was planned and what was actual, then I’m after the wrong information.”

 

“When I see projects that are exactly on time and exactly on budget, I know somebody lied,” says Malone. “Projects don’t happen that way, there is always variance, sometimes positive, sometimes negative.”

On a previous podcast, Brad Dempsey and Brad Malone talked about time billing, and the idea of not using time billing as a punitive measure.

“If you think that the estimate was right, once you start the project, are you hitting the estimate?” Malone asks. “If people are skewing their behavior to fit the estimate, then I am driving you to an answer and we lose the truth.”

 

Download the Solutions360 Job Costing Survival Guide

 

Also on the podcast:

What does it mean to tell the truth early with options?

Never personalize the color of a project. Just because a project is red, does not mean you are a bad project manager.

If integrators do not reward the truth, people will play games with their time sheets.

Once people start playing games, it will kill your culture.

 

Watch here:

What Happens When the Project Estimate Doesn’t Match Reality?

 

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Handpicked Related Content:

The Time Billing Paradox

 


Handpicked Related Content:

Solutions360 Releases New Job Costing Survival Guide

 


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