Have you ever been on a project where the deadline was way too tight? Chances are that tempers were frayed, entrepreneurs were unhappy, and team members were working ridiculous hours. Chances are, too, that this happened because often entrepreneurs underestimate project timelines and respectively the amount of work needed to complete the project!
Entrepreneurs often underestimate the amount of time needed to implement projects, particularly when they’re not familiar with the work that needs to be done. For instance, they may not take into account unexpected events or urgent high priority work; and they may fail to allow for the full complexity of the job. Clearly, this is likely to have serious negative consequences further down the line. This is why it’s important to estimate time accurately, if your project is to be successful.
During projects, business owners often ask for assurance that the project remains within the timeline. These requests for assurance do not come from nowhere. The “Harvard Business Review” reports that the average IT projects run 70 percent over schedule. Most businesses ask for an estimate at completion as a way of checking the status of the project, but estimates at completion have disadvantages
Why Entrepreneurs Underestimate Project Timelines
Entrepreneurs underestimate project timelines due to their urgency to gain first mover advantages and higher profits that first moving is expected to provide. However, it causes the nascent entrepreneur to truncate information search because it costs money and takes time and both of these are perceived to jeopardize the profits to be made from the new venture. The entrepreneurs move forward more rapidly in the exploration phase, and take more risk in the exploitation phase then would non-entrepreneurial individual. Often when these limits or timelines are exceeded the entrepreneur often misses the opportunity to re-evaluate their needs and adjust. Instead in the “trauma” stress of the moment takes over and they scramble to get things managed and done. Reason why entrepreneurs underestimate project timelines is very simple, many sole owners do not add their own time into the timelines or they base the timeline on a “full focus”. By full focus I mean that the only thing they are focused on is project; no ringing phones, no crying or sick children, no doorbells, no other customers, no employee demands, no distractions of any kind. If by chance they do both, the timeline really becomes skewed.
Uncertainty, Assumptions, and Inaccuracy
When entrepreneurs underestimate project timelines,they face the disadvantage of uncertainty, some stemming from the project itself and some stemming from assumptions. An estimate performed at the 10 percent mark of the project, for example, draws on far less known data than one performed at the 50 percent mark, making it far less reliable. Large, complicated projects involving multiple teams face heightened uncertainty as the performance of one team does not carry over to other teams. The entrepreneur must make assumptions about future performance and the standard-estimate-at-completion formulas assume project teams learn nothing from past problems. All of these factors contribute to underestimation of time for project completion.
Misrepresentation of Project Status
Some entrepreneurs misrepresent progress or downplay the severity of problems in estimates at completion. The reasons for entrepreneurs underestimation of project timelines range from overoptimistic interpretations of the situation to fear that honest reporting of problems will lead to project cancellation. The use of project management software offers an additional layer of accountability to the process, but it requires caution. The information in the software may lend itself to misinterpretation because of complexity or a lag in updating that makes it appear the project suffers from a problem that does not exist.
Three Estimates at Completion May be the Answer
A common approach to dealing with the disadvantage of uncertainty is to ask for three estimates at completion of the project, i.e., best-case, worst-case and expected scenarios. The three-estimate approach can mitigate some uncertainty associated when entrepreneurs underestimate the project timelines, but it creates a time loss disadvantage. Generating three estimates for three possible outcomes often means a significant time investment for the project manager that does not contribute to actual project completion. It also reduces the entrepreneurs availability to the project team members, which slows progress. Although this approach requires additional effort to create three separate estimates, it allows you to set more reasonable expectations, based on a more realistic estimate of outcomes rather than entrepreneurs underestimate project timelines.
Why Estimate Time Accurately?
Accurate time estimation is a crucial skill in project management. Without it, you won’t know how long your project will take, and you won’t be able to get commitment from the people who need to sign it off.
Even more importantly for your career, sponsors often judge whether a project has succeeded or failed depending on whether it has been delivered on time and on budget. To have a chance of being successful as a project entrepreneur, you need to be able to negotiate sensible budgets and achievable deadlines along with various checks and balances induced throughout the project completion.
Methods for Estimating Time
Bottom-up estimating allows you to create an estimate for the project as a whole. To analyze from the “bottom up,” break larger tasks down into detailed tasks, and then estimate the time needed to complete each one.
Because you’re considering each task incrementally, your estimate of the time required for each task is likely to be more accurate. You can then add up the total amount of time needed to complete the plan. This method reduces the risk that entrepreneurs underestimate project timelines.
In top-down analysis, you develop an overview of the expected timeline first, using past projects or previous experience as a guide.
It’s often helpful to compare top-down estimates against your bottom-up estimates, to ensure accuracy.
With comparative estimating, you look at the time it took to do similar tasks, on other projects.
With this method, you estimate the time required for one deliverable; and then multiply it by the number of deliverable required. This method readily reduces the risk that entrepreneurs underestimate project timelines.
For example, if you need to create pages for a website, you’d estimate how much time it would take to do one page, and you’d then multiply this time by the total number of pages to be produced.