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Avoiding project management landmines with accurate bidding

Supplier: Cincom Systems of Australia By: Peter Hill
02 December, 2014

Complex projects have many dynamic components that are constrained by finite conditions.

Consequently, unless the task has been successfully completed many times, project managers need to take great care when estimating the time, resources and effort required for successfully estimating and bidding a project they are considering.

It's all about costs and time that are effected by unknown variables, optimistic expectations and the fear of delivering bad news – "it can't be done THAT quickly!"

To increase the accuracy of an estimate, project managers should:

  • Focus on available resources and budget
  • Use planning documents, specifications and project plans
  • Identify all stake holders
  • Keep an accurate record of time spent on each aspect and phase of the project
  • Develop a contingency plan and focus on must haves, not nice to haves
  • Use multiple methods to derive an estimate to gain greater accuracy; keep details of the assumptions made and associated constraints
  • Determine a complexity factor for the project – from simple to extremely difficult
  • Consider a proof of concept or pilot programme
  • Be wary of bids from sub-contractors, ensure they conform to their scope of work and allow contingencies for their inaccuracy
  • Allow for overheads and determine how theses will be applied
  • Research standard methodologies such as PMBOK and the US GAO Cost Estimating and Assessment Guide

When the estimate is complete, the final bid should comprise the collaborated estimate, contingencies to cater for risks unexpected events and a profit component.

No one has a crystal ball to manage risk and it may be mitigated in four ways:

  • Using your staff (more control) or sub-contractors who carry some of the risk and overheads
  • A competitive advantage (technique or IP)
  • Project scope control – recover justifiable unexpected costs
  • Keep accurate records to ensure variations can be substantiated

If project managers can carefully scope, plan and constrain project conditions they can control risk and help ensure delivery on time and within budget.