Pitfalls of Early Estimates
Early estimates, by their very nature, are based on sketchy data and will not have a high degree of accuracy. By comparison, estimates prepared late in the development project life cycle are based on a much wider set of information and thus are more accurate. In other words, early estimates are inaccurate and difficult to make, yet they become the basis for project comparison and for developing guidelines for the final project funding.
When the project is in its inception phases, only a small amount of information is available about the specifics of the project, and yet an estimate is needed to make a decision on the viability of the project and the profitability of the resulting product. It bears repeating that, even though an estimate is needed at that time, those who use the estimate must be made aware of its inaccuracies and shortcomings.
Some organizations hold the project managers to the early estimates of the project. Progressive organizations allow systematic and logical changes to the project estimated cost throughout the project life cycle.
Given that the project manager will make the estimate as accurate as possible considering the data available, the project stakeholders should keep the limitations or pitfalls of early estimates in mind when selecting projects based on them and during the cost management process, particularly if the project is selected for implementation based on the early estimates. Nonetheless, a preliminary estimate is needed for making project decisions, even though it will have to be made before project objectives are clarified, project scope is defined, requirements are fully spelled out, functions are clearly defined, and project constraints have been fully formulated.
During the early stages (Project Management Process) of the project, and in the absence of extensive and detailed information about it, project managers use a variety of tools and techniques in formulating the project estimate. These usually are based on models that have proven to be successful during previous estimating efforts, in this project or in others. These models use mathematical expressions, from the very simple to the very complex, or a multitude of assumpti