After the development of the Work Breakdown Structure (WBS), the project manager wants to have a first (and good) guess about the required resources:

• What is the duration of the project?
• How many personnel with which qualifications are needed?
• Which other resources are required, e.g., equipment, materials, travel costs…
• How much will it cost?

Before you proceed, please read chapter 4, pp. 144-160, of the textbook (Wysocki 2009).

Estimation of duration

In the beginning, two important aspects of time in the context of project management have to be clarified: Duration and Work Effort. Duration means the number of business working days, excluding weekend, holidays, or other non-work days. Work effort is the effective time required to complete an activity.

Example: You are the boss in a sales company, and you want to send a bill to your customer. On Monday, you make a note for your secretary about the sold product (e.g., 1 laptop, Acer Travelmate 330, 1.500 €, client’s address). The next day, the secretary is types your note into the company’s billing form, puts it into an envelope, and brings it to the mail department. Unfortunately, it is late, Wednesday is a holiday, and the bill will be brought to the post office, at the earliest, on Thursday. The mail takes another 4 days to get to the client’s company (Monday), and another day inside the company to the client (Tuesday). So the work effort of all included persons might be 30 minutes. The duration is 5 business working days.

In addition, a working day of 8 hours does not mean 8 hours of focused and uninterrupted work. Meetings, coffee breaks, a chat in the hall, re-installing the computer, and many other things will interrupt work. A good guess is that an 8-hour-day comes up to 6 hours of effective work.

(Side note: Theory aside, many projects do not calculate on the basis of duration = business working days. They calculate on the basis of complete months, not taking into account if a month has 28 or 31 days or if there are several days of holidays or not – it looks nicer and is easier to get an overview. However, this usually ends up with employees working overtime and can be considered as bad project management.)

A second important issue on estimating duration of an activity is the relation between duration and engaged personnel. The relationship is not linear: If four people are working on an activity instead of two, the duration is not cut in half. New kinds of work will emerge in this setting, e.g., increased communication between the team members.

There are many reasons for variation in activity duration, such as skill level, unexpected events, low efficiency, and mistakes. Some can be predicted, some not.

Estimating the duration of an activity is difficult, especially if the activity is not familiar. For a first good guess, the following techniques can be applied:

• Using estimations (and numbers) of similar activities from other projects
• Using historical data from the project documentation of previous, completed projects.
• Asking experts, who have experience with similar projects and activities
• Asking team members (non-experts) for their estimations in several rounds (Delphi technique)
• Making a statistical average of an optimistic, pessimistic, and realistic estimation (three-point-technique)
• Combine Delphi and three-point technique (wide-band Delphi technique).

Estimation of personnel and other resources

People are a very difficult resource to estimate. If you are a senior manager in a company and a new project is coming, one or several of these situations might occur:

• The project requires three employees with the qualification of a Master in GI, but you have only two.
• You might have three GI Masters, but none of them has the required expertise in a specific field, e.g., Oracle databases.
• One of your employees has the required profile for your project, but she/he is busy at least half-time with another project.
• Your employees are more or less appropriate for your project, but in addition to the regular project work, a period of vocational adjustment has to be calculated.

The duration of an activity is influenced by three variables:

1. the duration itself
2. the work effort in person hours or person days
3. the percent per day the employee is able to work on the required project activity.

These variables also influence each other. The first two can be specified, but the third has to be calculated. There are several methods to do so.

Usually, other required resources can be estimated more easily, some of them even calculated more or less exactly, e.g.,

• Facilities (e.g., office rent)
• Equipment (e.g., new computers)
• Travel costs (e.g., for attending project meetings)
• Consumables (e.g., telephone, fax)
• Materials (e.g., paper, pencils, data).

Estimation of cost

After having estimated activity duration, personnel and other resources, we have the required information in order to estimate cost. As in the other estimation processes, approaches are to compare your project with similar previous projects or to ask experts, who are more experienced in this type of projects than you.

Wysocki (2009) suggests three types of cost estimations, working with different ranges of percentages over and below the stated estimate:

• Order of magnitude estimate
• Budget estimate
• Definitive estimate.

Costs are crucial for each project. Your estimation always remains estimation; reality might be different. Therefore, a frequent cost control is essential for being able to detect variances from the budget and being able to react in time.