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Group Discussion Board Forum 3
Accurate Estimating
School of Business, Liberty University
Author Note
I have no known conflict of interest to disclose.
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Accurate Estimating
The planning of a successful project starts with an accurate estimate of the time and
financial resources needed to complete the project. In the Sharp Printing case study top
management had determined to go forward with a project to produce a high-quality laser printer
for the masses costing under $200. Upon further evaluation of the top down estimate the project
manager realized that the project cost and time were grossly underestimated. Larson & Gray
(2021) ascertain that inaccurate estimates can lead to false expectations and dissatisfaction,
however obtaining more accurate estimates can be a trade off between the benefit of accuracy
and the cost for that accuracy.
Project Manager Role
In the Sharp Printing case once the project manager had the opportunity to do a bottom-
up estimate it was found that the project was going to be $1.25M more expensive than the initial
estimate and take 4 months longer. Bruggen & Luft (2016) point out management may have
contingency funds available on the chance that the initial estimate of the project was understated.
It is not clear in the Sharpe Printer case if a contingency fund is available. The lead project
manager has taken the step of meeting with her project team to brainstorm ideas to mitigate some
of the costs and time overruns with no good options to correct the overruns. The lead project
manager should take the step to re-engage with senior management to discuss the bottom-up
estimates that were completed giving a more accurate estimate of the additional costs and time to
complete the project. It would be worthwhile to commission a break-even analysis to determine
if the additional costs and time could be made up by being first to market with the product.
Senior management had prioritized that the project must be on time and within budget, if that is
not possible and the break-even analysis is not favorable, the project should be canceled.
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Top Management Action
Top management used the consensus method to determine the estimate for this project.
Consensus methods are generally a very rough estimate of project costs and time. In this case
the consensus method underestimated the cost of the project by a substantial amount and set a
project timeline that was not attainable. The project was presented to middle management who
questioned the timeline and proposed budget but were caught up in the excitement of the
possibilities and ultimately ignored the risks. According to Suzanne Lucas (2019) consensus
decision making may have the majority agreeing to a project that is not in the best interest of the
business. In this case, with an additional cost of $1.25M and 4 months more to get the product
on the market, the consensus decision may have been made in haste.
Mission Critical Estimating Techniques
The best option for estimating mission critical projects would be to use a hybrid model.
Larson & Gray (2019) state the hybrid model begins with a top-down estimate and
simultaneously a detailed estimate is being completed. This method would allow the senior
management to have more accurate information to determine if a project should move forward.
The hybrid method will take more time and resources to complete the estimate, but it can avert
launching a project based on faulty information and wasting resources only to cancel the project
later. With dynamic projects, such as the Sharp Printer project, top-down estimations should be
partnered with more flexible approaches to ensure proper allocation of resources (Momeni &
Martinsuo, 2018).
Conclusion
Accurate estimation of project costs and time is critical for business. If decisions are
made to launch a project based on faulty analysis, it can be very costly for the business. As a
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project manager we will face situations like Lauren, where a project was launched and after
further analysis the decision to launch was based on inaccurate information. The project
manager has a difficult decision to make on how to proceed. Proverbs 3:5-6 tells us to “trust in
the Lord with all your heart and lean not on your own understanding; in all your ways submit to
him, and he will make your paths straight” (NIV). By trusting in the Lord to guide us on the
correct path, going back to Senior Management in a situation like this is made easier. We are
armed with better information and therefore can help guide the business to better understanding
of the project.
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References
Brüggen, A., & Luft, J. L. (2016). Cost estimates, cost overruns, and project continuation
decisions. The Accounting Review, 91(3), 793-810. https://doi.org/10.2308/accr-51202
Holy Bible, New International Version, NIV. (2011). Biblica, Inc
Larson, E. W. & Gray, C. F. (2021). Project management: The managerial process (7th ed). New
York, NY: McGraw-Hill.
Lucas, S. (2019). Consensus decision-making pros and cons. The Balance Careers.
https://www.thebalancecareers.com/consensus-decision-making-pros-and-cons-4178335
Momeni, K., & Martinsuo, M. M. (2018). Allocating human resources to projects and services in
dynamic project environments. International Journal of Managing Projects in Business,
11(2), 486-506. https://doi.org/10.1108/IJMPB-07-2017-0074
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