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Project estimation is determining the time and cost required to complete the project, considering constraining factors such as project scope, effort, resources available, budget, and required quality. Project tracking is monitoring the implementation of the project to see if progress takes place on estimated lines.
Project estimation and tracking processes are of incalculable value to ensure that the project execution takes place in a systematic and organized way.
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Almost all project estimates begin with the project manager making a rough time and cost estimate for the project. The accuracy of such estimates depends on the expertise and experience of the project manager. An experienced project manager tries to relate to a similar project and estimate the time and costs, making changes based on the differences in project scope, changes to external environment, and other factors then and now.
Depending on rough estimates carries risk, for it could ignore certain key variables and remain way off track. For instance, the new trend of Extreme Programming requirements requires a completely different set of factors when compared to the traditional waterfall method of software development. Estimating a software project based on the waterfall standards would be way off course and unsuitable for an extreme programming project.
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The project estimation and tracking process is more of an art based on guesswork in the early stage. With the inclusion of more factors, it assumes a scientific basis. As a rule of thumb, the more factors included in the estimation, the less the chances that the estimate will be wrong. No estimate is 100 percent correct.
The specific factors considered when making project estimates include team size, make-up and distribution, project size, experience of team members, availability of tools, extent of deliverables required, the desired margin, and provisions for contingency such as delays, accidents, and other problems. Other factors considered include history of previous projects and industry standards.
For instance, estimating a software project requires considering factors such as different coding speeds of different programmers, which depend on difference in skills, variance in development platform, system scope and size, variations in project team size and organization, and other considerations. One approach is to take the weighed average of the value for the specific function and apply it to the extent to which such function finds use in the project. A few of the other more structured approaches include:
- Function Point Analysis: Function point analysis, used mainly in software projects, measures project elements from the consumer perspective rather than producer perspective. For instance, it measures size or deliverable functionality rather than lines of code, number of modules, number of instructions, size of the executable or other technical factors. Implementing a function point analysis estimation process requires recording data on existing projects in a database, and comparing the estimated project with the projects in the database using regression analysis or ranking to determine the man-hours estimate.
- Component Level Plan: This involves estimating the time required for each task, such as building form, report, and table in software projects, separately, and adding up the time taken based on the number of such tasks in the project. The best approach to determining the task list is from the Work Breakdown Structure (WBS).
In addition, there are many tools used to estimate project costs.
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Program Evaluation and Review Technique (PERT)
Program Evaluation and Review Technique (PERT analysis) is a popular methodology used for project planning as well as a project estimation and tracking process. PERT analyzes the tasks involved in completing the project and identifies the time required to complete each task, including the minimum time needed to complete the total project. PERT analysis takes place through a PERT chart that lists the flow of tasks in a project and the relationship among the tasks.
The biggest advantage of applying PERT analysis is the ability to cater to uncertainty. The PERT approach lists three time schedules: optimistic time, most likely time, and pessimistic time to complete a task, and uses a weighed average to make estimates. The PERT chart also reveals the critical path of the project.
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Project “tracking" basis itself on estimation, and requires comparing the actual progress with the estimated progress.
The Project Management Body of Knowledge (PMBOK) of the Project Management Institute provides comprehensive information on the principles of tracking.
One good approach to track a project is through Earned Value Management (EVM). This entails comparing the earned value of project against the baseline plan. When the earned value differs from the estimates, it manifests as cost overruns or scope creep.
Another approach, especially relevant for agile projects, is Quantity Adjusted Budget (QAB). In this approach the project manager keeps track of the project progress based on the budget readjustments that take place periodically when the project plan is updated through iterations.
Regardless of the methodology used, the effectiveness of the project estimation and tracking process depends on the commitment, interest and involvement of the project manager or project control engineer.
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- Oosthuizen, Jermey. "Are We There Yet?" Estimation and Tracking on the Road to Software Development and Implementation." http://msdn.microsoft.com/en-us/library/bb421527.aspx.%20Retrieved%2009%20March%202011.
- Kellen, Vince. “Estimating and Tracking Software Projects." http://www.kellen.net/Estimating%20and%20Tracking%20Software%20Projects.htm. Retrieved 09 March 2011.
- Kane, Bachir. “Estimating and Tracking Agile Projects." PMWorldToday, May 2007 (Vol IX Issue 5) http://www.pmforum.org/library/studentpapers/2007/PDFs/Kane-5-07.pdf.%20Retrieved%2009%20March%202011.