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Remove contingency

How many times have you heard this while creating estimates? Or how many times has the thought of doing this crossed your mind?

Regardless, contingency is needed in all your estimates, and it’s important to protect it.

A few typical misconceptions about contingency

It’s so we can give stakeholders added value throughout the project
Contingency is often seen as this bundle of money we can use to give stakeholders some freebies as the project evolves and they make requests. Although in some circumstances it can help improve or maintain the relationship with the stakeholders if used wisely, it is still scope creep at the end of the day and can have a larger impact on your project then you think.

It adds unnecessary costs
Some people simply do not know what contingency is and think it’s added costs that could prevent a potential contract to be signed.

Without it, we simply need to be efficient with our hours
This one is by far my favorite of them all; when it’s suggested to drop contingency, knowing how important it is, but compensating by “Being efficient with our budget”.

The first thing that comes to mind when I hear this is that we should always be efficient with our budget…But maybe that’s just me 😉

A few facts about contingency

It’s used to compensate the fact that an estimate is a guess
No matter how much time we spend on estimates, and how detailed and beautiful it is, it is still a guess. Short of seeing into the future, there is no way to 100 % accurately predict stakeholder feedback, project evolution, issues, or even actual time needed for all tasks.

An estimate is a guess, therefore we can expect to be over or under our estimate and contingency is there to help us prevent overage in these cases.

It’s expected to be spent
There are exceptions of course, but most project will use the contingency that was planned, keeping this in mind will make you focus on making sure your project has one.

It varies per project
Contingency is often calculated as a percentage of the total effort/costs or it can also be fixed amounts. For example, you can calculate 15% of hours estimated for the project, or apply the same percentage to your external costs for vendors, but you could also calculate a fixed amount for procurement based on your judgement or what makes sense.

Regardless, it varies depending of the project just like an estimate will vary, and must not be an amount that’s fixed across all projects (unless they all have the same budget of course).

How to do something about it?

Explain

One of the main reason contingency is often put aside is because it’s not properly understood. One of the best way to protect it is to explain to colleagues what it truly is, and how it should be used. Contingency’s definition or uses varies depending of people’s own experiences.

Depending of your role, it might be something you can do agency-wide, or it might be something you can do one person at a time as they tell you to remove it.

If you take the time to explain, you will be surprised how the team members can jump to other alternatives to reduce costs instead of removing contingency.

Be reasonable
Contingency is still more costs to your project, although needed, it still needs to be reasonable, based on knowledge on stakeholders, scope clarity, level of team’s expertise on that type of projects, and many other factors that can influence it. If you exaggerate the amount of contingency needed, you will then create a natural tendency for people to want to remove it, or your costs will be simply too high.


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4 reasons you should track time

The Passage of Time

Photo credit: ToniVC

Time is precious, especially when it comes to using the very little that’s available to do all the work that’s in front of us, or in front of the very limited resources we have for our projects.

So why not try to manage it a little better? Tracking time is a very good start, and just to be clear, I do not mean just tracking how much time you spend on a task, but also track how much time is available while it’s being used. For example, if a developer enters “4h” for a task, that’s great, but it’s even better if he is informed that 10h are left for that task.

Here is why it’s important:

1. Makes us realize the truth

How many time have you heard “in will only take two minutes”? Or maybe you are the one who has a habit of saying that! By tracking your time, you will quickly realize that the “two minutes” needed is actually 10-15 minutes. What if you think it’s 15 minutes? Well it’s probably more 30-45 minutes.

Unless we actually track time and pay attention to the time we spend on our work, no matter the time we think we need each time, we’ll need twice the time in the end, if not more. Tracking time makes us aware of all this. That’s when we can estimate the time we need accurately for our tasks, and that’s when you can really have control over your schedule.

Also, once you and your team know the real time you need for your tasks, your project estimates become more accurate, and that’s when it becomes even more interesting!

2. Gives us clear objectives

The objectives are set when specific amount of time are set for each tasks. It’s important to note that estimates need to be realistic for this to be efficient, or people will stop taking the time available seriously.

By paying  attention to the time left for a task, we have a clear objective of the time we are supposed to spend for a task (To develop a specific module for example).

Clear objectives of time gives you better focus so you will be more efficient and will avoid “stretching” the time you spend on the task. Also, you will make different decisions while executing your work so you can stay within the allocated time.

Furthermore, by knowing right away you should spend 5h on a module, when you thought of spending 20h, will immediately raise questions on your part, and you will be able to validate if you understood the task correctly, or if maybe you were going to gold plate the project. Maybe it’s the other way around, and the time estimated is not enough; the project manager can be informed quicker that way rather than if he finds out when it’s all over. It can then be managed proactively rather than reactively.

3. Gives us valuable information for estimates

When estimating projects, it’s important to be able to validate it by comparing our current estimate with previous estimates for similar projects. It can also be used for quick analogous estimates. By having no time tracked whatsoever, than all estimates are pure guesses, and can have horrible consequences if the projects are signed.

For example, if you estimate a website at 30K, and you compare with a previous similar website done, and realize that you need 50K, you want to know before it’s too late! If you find out at the end of the project, imagine the money lost! Even worst, if you do not track time, you won’t really be able to tell that you went over budget, which is worst.

4. We can analyze results and make important decisions

This is where in can become fun! Once you have accumulated a lot of projects time sheets, you can start to analyze the results. That can be a real eye opener.

For example, you may find out that all our projects were over budget when it comes to design. You can than decide to raise your design budget in general because the work in underestimated, or instead, have the design process optimized to reduce time spent.

You can also find out that all your projects categorized as “Website development” are the ones that have a bigger profit margin. You can than identify “why?” and improve your other types of project. Or maybe you will decide to have a greater percentage of website developement in your portfolio from now on.

There is a lot of information that can be analyzed here, and the more time sheets you gather, the more analyzing you can do.

In conclusion

The very little time it takes to track time will give you more than enough valuable information to make it worth your while.

Tickspot Time Tracking Software

There are many time tracking tools out there, one that I particularly like is Tickspot which also indicates the percentage of time left for each tasks as you enter your time. All the team members can know right away the time left, without having to do anything. It’s also a very fast and easy to use software that includes mobile applications, and a desktop time tracker too.

Do you track your time? How do you use the results?

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7 tips when estimating a project

Estimating a project is a very important part of your project, and can often be taken lightly. Truth is, if you avoid having good estimates, you will likely have a hard time staying on budget, and during your project (or after), it may be hard to analyze why you are outside your budget.

There are some key tips that can help you with that:

1. List what is being estimated

Seems obvious at first glance, but bear with me. Listing what is being estimated is more than simply writing: Programming = 40h. If you review your estimate 6 months later, you will have absolutely no idea what was included inside that 40h.

It is important to list each specific item of your project (home page, contact form, shopping cart, login,etc.).

How detailed must you go? Detailed enough for you to be able to understand it in 6 months, but also, detailed enough to be able to estimate each item easily. It will be more accurate to estimate separately “Contact form, Google maps, description of each team members” than just “Contact page“.

It will also become very useful when you are managing changes inside your project because it will be clear what was included in your estimate.

2. Estimate hours depending of type of resource

Once your items are listed, you must make sure you estimate the resources needed separately. Here I mean people, although expenses should be separated too. For example, avoid something like this: Home page: 40h.

Make sure you can plan your different resources during your project. It would be wiser to separate like this: Home page: Design 15h, Front-end 15h, Back-end 10h.

3. Include the accuracy of the estimate

This one is important and can actually save you some trouble in the future. An estimate can be accurate or it can be a general idea. It is important that your estimate includes that information.

For example, someone could ask you for a quick estimate and you tell them around 30K. There is a chance that this amount will become your final budget. When the project starts, you will estimate more in detail and may have to flag that the budget makes more or less sense, and that’s when you will be told that it came from your estimate, and now it is too late. Sounds familiar?

Include the accuracy in your estimate, if it was a quick estimate to give your colleague an idea, then 50%-75% might be the range of the estimate, and instead of simply 30K, you will tell your colleague 15-45K. A more accurate estimate might have a 5-10% range instead.

4. Include assumptions

An assumption is considered a “fact” at the time it’s being identified. Thus, it justifies the estimate of the particular item and it’s important to include it.

For example, if you estimate a registration form, you assume there will be 12-15 fields. Generally those assumptions should also be listed in your company’s offer to the client so you can control scope easily if the form ends up with 30 fields.

Remember that you may review this later in your projects, you want to make sure what was estimated is clear.

5. Do not forget time for project management

You wouldn’t dare forget that right? 🙂

Generally, it’s calculated using a percentage of the rest of the estimate. It could range around 10-20% or higher depending of type of client, type of project, type of team, etc. You may also want to list all project management tasks, and estimate each of them separately if you prefer. However, it will take more time, and I doubt you know exactly how much time you are going to “talk” during the project.

If you use a percentage, it is important to take outsourcing into consideration. If you estimate 200h of work and 20 000$ of outsourcing for development, you want to make sure you include time to manage the external resources too and not only add 20% to the 200h.

Note that depending of the company’s maturity towards project management, they may challenge the time estimated for project management. In other words, it may not be understood. If that is your case, then listing/estimating each task separately may be a good idea to explain your point of view.

6. Plan a buffer

If you are lucky, you may be able to include a small budget for unexpected events, or small changes, or errors, etc. If so, a 5-10% percentage could be applied to your overall estimate.

If it is a small simple project, then a buffer may not be justified, you want to avoid costing too much too.

7. Plan risks

This applies to project that have a large risk potential. You may have to manage closely the risks, create prototypes, or execute any other mitigation plans.

If that is the case, having a budget to manage/execute all this can easily be justified and should be included.

Note that it should be avoided for standard projects that show no real risks, or where your buffer could do the job.