As they say, preparation is key.
In that sense, how would you know if a project is worth your time, let alone feasible? Enter project estimation.
Imagine packing for a month-long vacation. You would consider whether to pack enough clothes to last you the whole time, or whether you might buy some of those clothes during the vacation itself. What activities you have planned will dictate what kind of clothes you’ll actually need. Are you packing just for yourself, or are you packing clothes for a companion as well? Did you remember to pack toiletries? Is there anything you need to pack but have yet to buy?
Project estimation operates similarly, where multiple interdependent elements need to be considered to make the journey as smooth and as successful as possible. In this article, we learn about project estimation, why it matters, and tackle some of the ways in which you can build an accurate measure of your project’s needs.
What is Project Estimation?
Project estimation is the act of forecasting the requirements for completing a project—this includes time and effort, resources, and associated costs. The goal is to paint a realistic picture of a project’s scale and expense, which project managers and other stakeholders use to make informed decisions around deadlines and resource allocations.
Anatomy of a Project Estimate
An effective estimate takes into account elements critical to a project’s success, and each can be affected by a wide range of factors. This includes:
- The scope outlines tasks and deliverables, stakeholders, and key milestones in the project. The scope’s level of detail will determine which tools and methods you can use to estimate the project.
- Time estimates are used to properly map tasks against relevant deadlines. The scope’s level of detail also directly impacts a team’s ability to estimate time, which would ideally factor in time spent on meetings, reporting, documentation, and other related activities.
- Resources, which include team members, external vendors, and contractors, as well as equipment needed for the project. Again, the scope helps determine appropriate skill matches when assigning team members or enlisting outside help on the project, as well as any necessary purchases for equipment. Availability is the most significant factor here, so teams will find it helpful to have built an inventory of their team members, their skills, external contact information, as well as available hardware and software, especially when these resources are shared with other projects or teams.
- Cost, which helps inform budget allocations for the project. This is directly tied to resource allocations, and often, this will be broken down into two categories:
- Direct costs, which are costs tied directly to the work, such as salaries, equipment, and licenses.
- Indirect costs, also described as shared or overhead costs, which are not directly tied to tasks but necessary for operations, such as utilities, and administrative, IT, legal or accounting support staff.
- Risk, which are events that threaten the seamlessness or quality of work. Risk increases in direct proportion to a project’s scale, especially in the context of time, as changes in schedule, technology, and other external factors can quickly derail projects and create a cascading list of issues.
Taking all elements and factors into account is essential for coming up with as accurate an estimate as possible.
Why is Project Estimation Important?
All project management activities are designed to help ensure maximum potential returns on investment—estimation of project requirements specifically helps teams make informed decisions on:
- Setting realistic goals and deadlines helps to maintain stakeholder trust and investment, as well as keep teams motivated and on track with their work.
- Mitigating risks by illustrating where various resources might fall short, prompting project managers to make necessary adjustments or prepare contingency plans.
- Allocating resources by understanding the work ahead, the right people can be assigned to the project, which cascades into timeliness and higher-quality output.
Estimates are one of many key sources of information, and are especially critical before a project even begins. By employing effective project estimation techniques, your team can tackle projects with more confidence and expect better end results.
Project Estimation Methods and Best Practices
Now that we understand the concept of project estimation and why it matters, it’s time to learn how to actually put it to use. Before anything else, a fundamental thing to understand is the project management triangle and how it works, as these are the building blocks of any estimate.
Below are some of the most common project estimation techniques and best practices you can use:
Expert judgement
Expert judgement, also known as expertise-based estimation, focuses on gathering insight from subject experts to scope out and estimate work. It is reasonable to expect that an expert would have the most information on a task, its scale and complexity, as well as any associated risks based on their experience, so their input can help teams arrive at a more accurate projection.
The key to this method is being able to properly identify relevant experts to help estimate your project. Additionally, you will want to combine this with other methods below, mainly to streamline how estimates are determined.
Three-point estimation
As its name suggests, the three-point approach to project cost estimation incorporates three different scenarios in coming up with an estimate:
- The optimistic (best-case) scenario, which assumes tasks run smoothly and are finished in the shortest time/with the lowest cost,
- The pessimistic (worst-case) scenario, which assumes the opposite as a result of issues and delays, and
- The most likely scenario, which assumes relatively normal conditions for completing the task.
A weighted average between the three scenarios often serves as the final estimate, and while this takes more effort, this provides a more accurate and thorough assessment of the work. For this, the PERT chart is an excellent supporting tool to use.
Bottom-up estimation
Bottom-up methods favor accuracy by breaking down work into manageable chunks (usually at the task level). The individual estimates then form the total estimate. While this method is dependent on having a well-defined scope and tasks, it is often considered the ideal approach, as the level of detail can easily be supported by almost all other methods to achieve the most thorough estimate. Parametric estimation is particularly useful for quickly evaluating any routine and easily quantifiable tasks identified in the scope.
Beyond supplementing this approach with other methods, learning about the work breakdown structure is an excellent foundation for building a bottom-up estimate.
Top-down estimation
Top-down estimation focuses on speed by creating high-level estimates, which is often employed when details on a project are limited and a quick estimate is needed. There are two common methods associated with the top-down estimate:
- Analogous estimation, which uses historical data as a baseline for the new estimate. The key here is taking data from similar projects or tasks performed in the past, and using their actual numbers as a reference. To combat the lack of accuracy, it’s important to take note of any potential differences between the original task and the new one (for example, the emergence of new tools and techniques).
- Parametric estimation uses historical data to mathematically estimate for work, and is often applied where there are linear relationships between parameters, such as in construction project cost estimation. This is often used to scale an estimate based on a given quantity. For example, if a task takes 15 minutes to do, you can reasonably estimate that it would take 150 minutes to perform the same task 10 times, given other parameters such as manpower are constant.
It’s important to note that relying solely on a top-down estimate isn’t recommended. Instead, you will want to combine it with a bottom-up method whenever possible, to ensure a thorough assessment from both angles.
On top of these methods, project cost estimation software can help optimize your planning, which is where Workamajig comes into play.
Build Estimates That Work with Workamajig
Project estimation provides useful insight into a project well before you get started. By combining proven methods for breaking down work, measuring them, and adjusting resource allocations to match, you set your teams up for a confident and successful project life cycle.
With Workamajig, the premier project management software, you have an all-in-one solution for creating your project timeline and seamlessly transitioning into task and resource management. Scope projects and estimate tasks with ease, then use built-in collaboration and reporting tools to ensure that your team stays on top of the work, completing tasks and addressing roadblocks along the way.
Originally published July 15, 2025.