Project Estimation Strategies

The assignment content discusses the challenges faced by system managers in providing budget estimates for projects. It highlights five dangers to avoid: estimating vs negotiating, varying technical skills, estimating own work, premature detailed estimates, and measuring unit of work. To overcome these pitfalls, steps include starting estimation on project specifications and documentation, double-checking costs against industry standards and historical values, incorporating space for delays, estimating budget based on different skills utilized, and avoiding premature estimates. The article also mentions the unique challenges faced by the healthcare industry in estimating costs due to intense competition, technology updates, and the importance of optimal resource utilization.

Project Estimates 1
Module G Assignment 1: Project Estimations
System managers have to provide budget estimates, but they face many dangers in that like
the:
• The difference between estimating and negotiating
• Wide variation of technical skills
• Danger of estimating your own work
• Management insistence on premature, detailed estimates
• An industry-wide difficulty of measuring the unit of work
• Estimates based on assumptions of unpaid overtime
To avoid these pitfalls, they can take the following steps:
Step 1- The system managers usually forget something or the other when they estimate the
budget for the projects. So, they should start the estimation on the basis of the specifications
of the project and the documentation that has been made related to the project. They need to
review the overall concept of the project so that budget contains all the things that are
required by the users for getting a functional system. The budget should incorporate the scope
of the work. The system managers need to follow up on the discrepancies, and they should
make a list of the things that will be incorporated in the budget (Lee, 2012). This will help in
fighting the danger of making the estimates based on the assumptions and the danger of
estimating your own work.

Project Estimates 2
Step 2- The system managers should double check the costs in the budget against the similar
costs of the other projects, the industry standards, and the historical values. They should
ensure that they get the binding quotations for the major items and they get the estimates of
the budget from various suppliers for other costs. This will help in fighting the danger of the
difference between estimating and negotiating.
Step 3- When the work is delayed, the companies shave to incur extra costs and thus the
estimated budget gets disturbed. Thus, the manager must incorporate the space for their
delays in the budget. This generally happens when the system managers calculate to unit
work in an inappropriate manner. So, they should measure the unit of work in an industry-
wide manner. This will help in making the estimate of the budget accurate.
Step 4- The people who are involved in the project have the different set of skills that are
utilized differently for completion of the project. When these skills are different, their cost of
utilization is different in the form of different salaries paid, purchase of equipment,
installation of technology, etc. so, the system managers should estimate the budget as per
these different skills, and they should not be measured in the same manner or on the same
basis.
Step 5- The premature estimates should be avoided. The systems managers should consider
the final figures; they should not consider the costs that are premature and unqualified.

Project Estimates 3
The healthcare presents some unique challenges that not faced by other industries
The costs of healthcare continue to rise because the consumers are becoming savvier in the
way they spend in the healthcare. It is very difficult to estimate the costs in the healthcare
because this industry faces intense competition in the market and the people who own the
healthcare facilities provide many choices by which the consumers discriminate. The
technology regularly gets updated in the healthcare products, so it is very difficult to update
the budget again and again. They people who estimate the budget for the healthcare facilities
have to ensure that the funds that are dedicated to the facilities are earmarked for its design
and they are utilized in the most optimal way (Khodakarami, 2014). Then, the managers also
have to decide the ideal time for commencing the facilities and the budget ha to incorporate
that too. The healthcare facilities cannot afford to take risks in the budget because it is
directly related to the well-being of the people. Also, these people have to take more care
when they estimate the budget.

Project Estimates 4
References:
Khodakarami, V., & Abdi, A. (2014). Project cost risk analysis: A Bayesian networks
approach for modeling dependencies between cost items. International Journal of Project
Management, 32(7), 1233-1245.
Lee, J. S., Keil, M., & Kasi, V. (2012). The effect of an initial budget and schedule goal on
software project escalation. Journal of Management Information Systems, 29(1), 53-78.