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The anatomy of an estimate: how we scope

10.4.16 By: David Rosenstock

We’re frequently asked by clients, “how did you get to the estimate we received for our project?” Fundamentally, we refer to our over ten years of experience and 800-plus implementations. But creating good estimates takes more than experience and historical data.

In an effort to address the how and be as transparent as possible, we have produced an illustration showing the key factors that go into our standard estimates. We’ll break down the various components and detail how they impact the hours scoped.


Known Knowns (GREEN)

Let’s start in the bullseye. This area of the circle is directly related to the size of your project. Larger organizations tend to have more processes and result in more labor. Similarly, the more use case requirements (programs, profiles, e-commerce, and so on) the larger the green area becomes.


So how do we gather the estimate requirements?

These Known Knowns are vetted during the preliminary OPR, operation process review, which is a series of conversations with one of our solutions analyst during the initial sales cycle. These assessments are non-billable, consultative discussions where we ask pointed questions that will help us determine what the green section of the circle includes. This process typically takes anywhere from 5 - 20 hours. This includes Q&A, research, consultant review, deployment calendar composition, solution selection, resource allocation, and other considerations.

When we combine this OPR discovery with our historical knowledge we have an exhaustive list of standardized use cases that serve as measures from which we build a more specific estimate. For example, a data migration from Access with 30 tables and under 60K records typically takes 35-65 hours to migrate- depending on the complexity.

Where a client falls in the range of these use cases can be established by six variables:

  • The novelty of the requirements presented (have we seen this use case before?)
  • The complexity and the skill required to perform the services (do you need a specialist to facilitate the labor?)
  • The number of other established use cases (is your project large or small ?)
  • The time constraints imposed by you as our client (does it need to be done next week?)
  • The accessibility of your team (do you have limited staff, limited availability, and limited experience?)
  • The nature and longevity of our professional relationship with you (are we familiar with your project management style, strength, and weaknesses?)

Once the configuration and data migration estimate is established, we extrapolate the hours needed for training, operation process review, and project management based on averages calculated from our 800 plus previous projects.

At this point, we can get a sense of the project's diameter (architecture/project complexity). The diameter helps us extrapolate the next two levels (yellow and red) which represent project variances. Project variances are the portion of the project labor that we simply can’t confirm during the assessment process.


Known Unknowns (YELLOW)

The Known Unknowns are the yellow part of the target and can be unpredictable. As a result, we will build a project variance at 15% to allow for expansion and fit the breadth of the project accordingly. Every project should have a requirements gathering stage to help uncover these Known Unknowns. The more use cases we unearth during our initial assessment, the more Known Unknowns we can see. For example, we may know there are departments or processes that need to be addressed, but we and/or the client may not know the complexity yet. While we’ve accounted for the time it will take to further address those Known Unknowns, we can’t confirm what they are in their entirety. This is evaluated in the OPR period. We state outright in our estimates how long that OPR will take, which is a formula that is extracted from the area of the green and yellow sections. We call this the project complexity.


Unknown Unknowns (RED)

Unknown Unknowns, the red section, stem from specific business requirements that don’t arise until after the assessment or OPR phases. Sometimes the client was completely unaware of an Unknown Unknown or the project itself may have revealed the business need. That’s ok. It happens. It is for this reason that our agreements allow for addendums to account for the use cases that were not initially addressed. In some cases, the Unknown Unknowns can be addressed within the agreement leveraging the project variance.


Hourly Rate

Market rate is established after we perform a yearly comparison for companies with similar tenure, qualifications, size, awards, and certifications. Discounts are applied to all nonprofit organizations and are secured for the length of the agreement.


Accuracy of the estimate

Considering all these variables, we are astonishingly accurate in our estimates. We have a very high accuracy rate when it comes to scoping our implementations. Some of this comes from experience, but most is due to the preparation and having a solid system with tested processes in place. To see just how accurate our estimates are, reach out to us for a complimentary consultation.


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