If there are one thing that everyone gets excited about, it’s costs. Clients want more, for less. And agencies wants to do less, for more.
Before you keep reading this article, let me tell you that we wrote a complete guide on how to estimate projects. If you haven’t already, bookmark this page and check out our guide. You will find the best practices, infographics, and a free estimate template for you to download.
Playing it safe?
Project managers have a commercial responsibility for delivering projects profitably and on budget. So the easy and safe option can be for you to over-estimate and add lots of fat to ensure you won’t go over budget. But playing it safe could cost your agency the entire project – estimate too high and the project could get written off as too expensive and never get started.
Playing it risky?
The other temptation, especially if you’re a people (or client) pleaser, is to come up with a budget which you know isn’t really high enough, but that you know will be palatable for the client. That’s no good either as it simply defers the difficult discussions of needing more budget to later.
Walking the tightrope
Getting the balance right between estimating too high or low enables you to manage the tension between these two elements; safety and risk – creating a cost that the client can buy, but that’s high enough to enable you to deliver on budget.
10 top tips for creating cost estimates
The following 10 top tips blog series have been written as a guide for estimating and approaching creating cost estimates in the midst of it all. We’ll look at the following 10 top tips for approaching creating cost estimates:
- Define the idea
- Identify all the constituent parts
- Do your research
- Estimate the hard way
- Prepare for the unexpected
- Cost only what you know
- Allow for AM & PM time
- Check it
- Caveat it
- Be transparent
- Creating cost estimates: a summary
What do you think?
What do you think we’re missing? In the next ten posts we’ll delve into the details of these tips but what else should PM’s be thinking about when developing cost estimates? We’d love to hear if you’ve got any tips too – why not share them using the comments below?