We are often required to supply estimates. Project managers would like us to say how long a task will take. That number should be on firm grounding. S

Calibrated Estimates | Discoveries

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2024-10-04 09:00:34

We are often required to supply estimates. Project managers would like us to say how long a task will take. That number should be on firm grounding. Sometimes we need to say a single number, sometimes a range like “best case – average case – worst case”.

Most of the time our focus is on one of the range's numbers, and the other numbers are derived from that. A naive estimation like “plus/minus 30%” is common. We mostly try to set the anchor value reliably.

This estimation is difficult in its own right, but another side is often neglected: what confidence do we have in the estimate?

Demanding 100% confidence is not very sensible, because the ranges get immense. And since the estimate isn't an end in itself, but is supposed to be used, for example in project plans, it is important to assign a sensible confidence level to the estimate. That confidence level should be quantifiable, consistent and reproducible.

There is no “right” value for the confidence level we aim at, but a good rule of thumb is 90%. Most estimates are correct then, but the estimated ranges do not have to become extreme, in order to include rare outliers.