Phased Estimating: The Key to Accurate Project Planning, Budgeting, and Forecasting

Discover how phased estimating can revolutionize your project planning process, providing the accuracy and insights needed for success in every phase.

8 minute read

In a business environment where project outcomes hinge on the alignment of scope, schedule, and budget, phased estimating stands as a beacon that guides project managers through the tumultuous waters of project planning.

It's not just a buzzword; it's a methodology that promises to refine how we approach the trifecta of project success criteria. As we peel back the layers of traditional project management strategies, we find that phased estimating offers a structured yet flexible approach to navigating the complexities inherent in any project. 

In this blog, we’ll demystify phased estimating and illuminate its pivotal role in enhancing project planning, budgeting, and forecasting. By the end, you'll see why adopting phased estimating isn't just a choice, but a necessity for those looking to thrive in today’s project-driven environment.

What is phased estimating?

At its core, phased estimating is about breaking down the estimating process into digestible, manageable stages or phases. This method allows for more detailed and accurate projections at each phase of a project, adapting as the project's scope becomes clearer and more defined. It's a dynamic approach, shifting away from the 'set it and forget it' mentality of traditional estimating. 

Phased estimating acknowledges that what we know at the start of a project is not enough to carry us through to the end without adjustments. It's about using each phase as a checkpoint, recalibrating our estimates based on the latest project data and insights. 

This iterative process not only increases the accuracy of our estimates, but also provides a roadmap for project managers to navigate the complexities and inevitable changes that occur during a project's lifecycle.

The role of phased estimating in project planning & proposals

So how does phased estimating impact project planning?

You shouldn't think of phased estimating as an initial step in the project management process. Instead, think of it as the cornerstone of crafting a proposal that accurately reflects the project's scope, schedule, and costs. By integrating phased estimating into project planning, teams can develop proposals that are not only comprehensive, but also adaptable, allowing for adjustments as new information comes to light or project needs change.

The strength of phased estimating lies in its ability to provide a detailed and actionable plan that evolves with the project.

It supports a dynamic planning process that aligns with the project’s growth, ensuring that each estimation phase builds on the previous one with increased accuracy and insight. This iterative approach secures stakeholder confidence and sets a solid foundation for the project's execution phase, enabling project managers to lead with clarity and foresight.

Through phased estimating, project planning becomes a strategic asset that guides your teams from proposal to project completion with a clear vision and adaptable strategy.

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10 steps for completing the project proposal estimate:

  1. Understand the scope. Scope comprehension is the key to accurate estimating
  2. Utilize the project template to clone or populate the project information, the past estimates, and the timelines for the tasks
  3. Establish a work breakdown structure (WBS)
  4. Estimate the resources needed to complete the work
  5. Understand the timing of needed resources
  6. Include all materials, services, and travel required
  7. Time phase the estimates
  8. Ensure that the right skill set is available when you need them
  9. Use To Be Determined (TBDs) if the name of the resource is not yet available
  10. Gain buy-in from the proposal team and the functional departments before submission to the customer.

The magic of a work breakdown structure (WBS)

Now that we have a better understanding of how phased estimating lights the way in project planning, let's zoom into a game-changer within that process: the Work Breakdown Structure (WBS).

Picture a WBS as the skeleton of your project, where every piece of work gets its own spot in the hierarchy. Here, the goal is to take the project's big picture and slice it into bite-sized pieces that are easier to digest and manage.

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Creating a WBS is how you lay down the tracks for your project train right from the get-go. During those early proposal days, you sketch out the main tasks. As the project picks up steam, you dive deeper, filling in the details that ensure ideas can be turned into action.

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Here's why a WBS is your best friend in project management:

  • It's like delegating pieces of a puzzle to different team members, making sure everyone knows their part.
  • It gives you and your stakeholders a visual snapshot of the project, making complex plans easier to understand.
  • It lays down the groundwork for your schedule, budget, and how you'll report progress, keeping surprises to a minimum.
  • A WBS can be tweaked and reused for future projects, saving you time and headaches down the road.

The right WBS keeps everyone on the same page and the project on track, making sure what you planned in those initial phases turns into the success story you envisioned.

Navigating the triple constraints: scope, schedule, and budget

Let's talk about the project management trifecta: scope, schedule, and budget. If you've ever found yourself scratching your head, trying to figure out exactly what's expected on a project, you're not alone. Getting a firm grip on the project's scope is often easier said than done, especially when you're dealing with complex projects where every detail counts. 

Here's where the magic of a Statement of Work (SOW) comes into play. Think of the SOW as your project's playbook, listing all the plays (or tasks) with specific reference numbers so you can keep track of everything without breaking a sweat.

But beware of the ever-lurking shadow of scope creep. It's that sneaky beast that adds tasks and features without any extra time or money to support them. The best weapon against it? A solid change management process and a culture that understands the importance of sticking to the plan unless there's a really good reason (and budget) to change it.

And let's not forget about getting everyone—yes, everyone—on the same page from the start. Having a clear scope review with all stakeholders can save you from the "Oh, I thought you meant..." conversations down the line. Plus, missing out on key scope details can hit where it hurts the most: your budget.

Speaking of budgets, they're not just about numbers. They're about understanding who's doing what and when. That's why tying your tasks to specific need-by dates and knowing when your team is available is crucial. It turns your project schedule into a well-oiled machine that keeps your budget on track. And in the world of professional services, remember, it's all about the people. So, as we gear up to dive deeper into resource planning, remember that mastering the balance of scope, schedule, and budget is what keeps your project on the path to success.

The essentials of resource management and real-time metrics

In the world of project management, the pulse of resource management beats through the rhythm of real-time metrics.

The vitality of your project hinges not just on the resources you have, but on how effectively you're using them. To steer your project toward success and away from the cliffs of financial loss, you must embed real-time data into the fabric of your decision-making process.

Understanding the dynamics of resource utilization is crucial.

It's about finding that sweet spot where your team is productive but not overworked, ensuring profitability without burnout. Questions like "What level of utilization makes us profitable?" and "How do we balance billable versus non-billable work?" are the building blocks of a robust resource management strategy. Keeping your project probability analysis current ensures that your forecasts for billable revenue and resource utilization are as accurate as possible, reflecting the real-world scenarios your team faces.

As your project unfolds, the Estimate-at-Complete (EAC) becomes your compass.

The EAC, which equals the total actual costs plus the estimated costs to complete the project (EAC = Actuals + ETC), is not static. It's a living forecast that adapts as project variables evolve. 

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Whether it's a key team member winning the lottery or being reassigned to a more urgent task, these shifts necessitate a recalibration of your resource plan. This continuous adjustment ensures that your project remains on target, both in terms of scope and budget, enabling you to navigate changes without losing sight of your end goal.

7 tips for efficient resource management

  • Centralize Resource Plans: Ensure all plans are in one place, accessible to all stakeholders.
  • Catalog Skills: Know who can do what, and when they can do it.
  • Forecast Across Life Cycles: Anticipate resource needs from start to finish, not just at kickoff.
  • Utilize a Unified Resource Pool: Share resources company-wide, beyond single projects.
  • Plan and Report at All Levels: From specific tasks to the entire enterprise.
  • Offer Real-Time Insights: Keep stakeholders informed with up-to-date resource demand and KPIs.
  • Avoid Spreadsheet Silos: Move beyond Excel to integrated planning tools.

Elevate your project planning through phased estimating with Unanet

Especially in today’s world, phased estimating stands as a cornerstone methodology, ensuring that every stage of your project is precisely planned, budgeted, and forecasted. Unanet's ERP for AE firms brings this methodology to life, offering a sophisticated platform that harmonizes the phased estimating process with the broader aspects of project management. 

Our system is your ally in navigating the complexities of modern projects, providing you with real-time data and insights that are crucial for making informed decisions every step of the way. Ready to learn more? Gain further insights on persuading your leadership on the value of effective project planning with our white paper, 9 Simple Steps to Convince Your Leadership to Adopt Project Portfolio Management (PPM).