Productivity Track

How to Calculate Realistic Time Estimates for a Project

You may have stellar skills and a fantastic team, but neither helps that sinking feeling when you have to ask a client for a deadline extension on a project.

“Why do you need two more weeks?

And you just want to:

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Maybe you didn’t factor in possible risks or pitfalls. Perhaps you didn’t account for delayed correspondence. But all that matters is that you will not meet the deadline 💀.

You’re not alone. Inaccurate time estimation is the cause of 25% of failed projects.

Learning how to estimate time for a project is tricky, but critical to its success. 

In this guide we’ll go over:

  • What is time estimating in project management?
  • Why is estimating time for tasks important?
  • Falling victim to the planning fallacy
  • How to estimate time for a project

Let’s start with the basics.

What is time estimating in project management?

Time estimation in project management refers to assessing the number of hours, days, or weeks to complete a specific task or project. The deeper your understanding of the project, the more accurate your time estimates will be.

The benefits of accurate estimates are obvious: projects are delivered on time, clients are happy, your team isn’t overwhelmed and your project profits skyrocket.

How do you create accurate time estimates for your projects? Feel free to skip ahead to the how-to steps.

But first let’s quickly go over why estimating time is essential in project management.

Why is estimating time for tasks important?

We could just say “to avoid awkward conversations with clients”, but let’s dig a little deeper.

Completing your projects on time is directly linked to making an accurate estimation.

Clients come back to companies with a solid track record of delivering projects on time—especially big-budget clients who are prepared to invest a lot of money.

It literally pays to build this track record and advertise it.

Yet, in 2017, only 50% of surveyed projects were completed on time. But according to a 2020 study, only 29% of projects are always finished on time.

This means teams are getting bad at estimating or delivering projects.

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Just look at that “sometimes” 😅.

Putting in the effort to learn how to estimate time for a project will determine a realistic completion date, help create your budget, and build your reputation.

It’s also a matter of respect and integrity–not only for your clients but internally for your staff.

Your team feels more comfortable when they know you can manage a deadline.

Don’t fall victim to the planning fallacy

The planning fallacy is a term that describes the human tendency to underestimate the time needed to complete a task. 

It also covers the costs and risks we often ignore, even if we’ve encountered them before.

It generally comes from:

  1. Having optimism in our abilities, budget, luck, and energy
  2. Getting set in our initial idea of how long something will take, regardless of new information
  3. Ignoring and dismissing negativity
  4. Facing pressure to finish tasks/projects quickly

For example, say you work for a digital marketing agency as a web developer. You’ve probably built quite a few websites over the years.

So you figure the landing page a client is requesting will only take a week to create. So that’s all you give yourself.

But then, thanks to Murphy, things go wrong.

Then the client takes two extra days to approve the color scheme. 

The internet goes down for five hours.

Your dog gets sick on Thursday.

And suddenly, meeting the deadline seems impossible. You’re scrambling to negotiate a new deadline—unsure of how the client’s reaction.

How to estimate time for a project accurately

Now let’s get into the nitty gritty of project time estimation.

Here’s how to accurately estimate the time for your projects and their subsequent tasks.

Time estimating can be broken down into 7 steps:

StepDescription
Establish the work that needs to be doneList every task the project contains to better account for them
Apply the right estimate techniqueReview available estimation techniques and choose one that suits your project
Don’t forget the revision hoursAdd in extra time for review and revision
Plan for everything going wrongRound your time up to add contingency padding
Bring all the time estimates togetherAdd up all your tasks, revision, and contingency to get your first estimation
Review, revise, and finalize the estimateReview your estimate with tools and teammates to ensure it’s realistic

Now the long version.

1. Establish the work that needs to be done

A recipe doesn’t just say “make stew, you’re done” – it lists out steps. 

And so should you. List out every task required to complete your project.

At this stage, you’ll be scoping out the project and gathering information on the requirements to understand better what exactly needs to be done.

This is sometimes called the project discovery phase.

Identify the overall goals of the project. Knowing the desired outcome and all of the tasks and subtasks required to achieve it is essential as part of this process. 

Once the project has been fully scoped out, you can move on to creating a Work Breakdown Structure. This will give you an idea of what phases and tasks you need to complete for the project. 

Collaborating with experts in your team here can be extremely helpful. 

Ask for their expertise and advice about which tasks to account for. They might also have ideas on how the tasks can be broken down smaller.

For example, here are the typical phases and examples of tasks that are involved in a simple website build:

PhasesTasks
Discovery– Client meetings
– Client communication
Planning– Research into what elements are needed for the website
– Develop a sitemap to create a navigational system
– Collect content from the client
Design– Creating wireframes
– Creating mockups
– Creating brand guidelines 
Development– Building a WordPress theme
– Building a desktop and mobile version of all pages
Testing– Test functionality of website on desktop and mobile
– Updating plugins 
Launch– Migrating files to client-server
– Launching website
– Post-launch testing

Taking time to fill out a WBS document will help you to better understand what exactly is involved in each project and will drastically improve your project time estimates.

Or if you’re using Toggl Track, you can also look at historical data inside of the reports tab to view past projects and get an overview of:

  • What tasks were involved
  • How long each task took

A complete log of past project tasks at your fingertips!

Summary Report inside of Toggl Track
Summary Report inside of Toggl Track

Let history be your guide, and you’ll realize that you typically have a solution to your scheduling problem right in front of you.

Further reading: Creating projects in Toggl Track

Tracking your project tasks, meetings, and client comms will give you tangible data to work with like:

  • What the heck goes into a project?
  • How long does it usually take?

You can also check out how accurate your past estimations have been if you setup time estimates for each task inside of Toggl Track:

Toggl Track’s project dashboard with forecast

Toggl Track’s project dashboard will show a forecast for project completion based on the project estimate and the hours that have been clocked for that project so far.

Top tip

You can set up custom hourly time estimates for your projects or tasks and monitor actual hours vs the estimate inside of Toggl Track. Essentially this provides a budget of time for your projects. When paired with “Alerts“, you can trigger emails to relevant users based on hours tracked.

Toggl Track’s project and task estimates feature

2. Apply the right estimate technique

When estimating time for activities, you should choose an estimation technique that suits your project.

Estimation techniques allow you to assign an accurate time value to each task in the project. Meaning you won’t just have to use “gut instinct”.

Here are the top 4 estimation methods:

TechniqueDescription
Three-point estimatingCombines the best-case scenario, the worst-case scenario, and the most likely scenario to create a prediction
Top-down estimatingTakes the project scope as a whole–avoiding the nitty gritty of the work. Perfect for quick estimates. 
Bottom-up estimatingTakes the smaller parts and builds it up into a whole. Takes longer, but more accurate.
Expert judgment estimatingUses the expertise and instinct of an expert in the field. Great for quick estimates, but accuray can vary depending on experience of the “expert”.

To learn about these methods in-depth, read our new guide on project estimation techniques.

Most of these techniques benefit from solid data, which might be tricky for some companies, as 54% of organizations lack the ability to track project KPIs in real-time.

But again, letting history be your guide when it comes to time estimation is a great way to plan your future projects.

This data can be found by analyzing your past projects inside of Toggl Track’s reports tab.

With reports, you can get:

  • A high-level overview of past projects–including total hours
  • A breakdown of tasks inside of each project and their tracked hours
Individual tasks inside of a project

Exactly what you need to use either top-down, bottom-up and analogous estimating.

Top tip

100% accuracy is not worth the time you’ll waste trying to “be accurate”. Getting a general number for your tasks and projects is key. 

The best practice is taking the average time of your last three similar projects or tasks. The more you do this, the more “accurate” your estimates will become.

Completing a project for the first time? You will have to rely on your knowledge and experience of similar work. You can start to use historical averages once you’ve completed enough of a particular type of project.

3. Don’t forget the revision hours

Depending on your project and industry, you may want to include revision hours in your estimate. 

This will include adding a reasonable amount of time for revising any tasks requiring testing or client feedback before you can move on to the project’s next stage.

It tends to be most necessary with work like:

  • Software development
  • Website bug testing
  • Graphic design
  • Tech development

Depending on the project and/or industry, you may want to add in a certain number of revisions for specific tasks. 

For example, say you limit the number of client revisions to three on some website mockups, and charge extra for any additional revisions. 

Clients tend to get miraculously more thoughtful and decisive when it’s going to cost them extra. 

How do you know how many revision hours to add??

Experience helps you hone your process and minimize unnecessary revisions. So this will vary depending on the type of work. But the bottom line is that revisions are necessary to most projects, so it’s completely realistic to include revision time in your estimates.

4. Plan for everything going wrong

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Things go wrong. It’s part of life. 

This means contingency hours need to be part of your plan.

It isn’t pessimistic. It’s smart.

Be it scope creep, your client being a pain, or unexpected events like a client wanting “a few extras” added to the project, you need to be prepared and have flexibility in your plan.

Adding extra hours onto projected timelines will create cushioning for potential delays that just happen.

Plus, if nothing goes wrong, you’ll finish earlier and delight your client.

Win-win.

How many contingency hours do you need to add?

Again, this will mainly come down to your own expert judgment and experience. 

But suppose you’re tracking your project hours in Toggl Track. You could review past projects inside the projects tab to see how close they came to their original estimates and then adjust future estimates accordingly.

Projects tab inside of Toggl Track

Top tip

You cannot plan for all contingencies. In case of unexpected delays, it’s best to communicate them early with your clients. Share:

  • What’s causing the delay
  • Why it’s unavoidable
  • What’s the impact
  • A plan to reduce its impact

5. Bring all the time estimates together

Now it’s time for the first total estimate (it won’t be the last!).

You should be able to create a pretty accurate time estimate if you followed the steps above. 

If you created a Work Breakdown Structure and analyzed past project data, you should see the total number of hours it will take to complete the project. 

For example, let’s revisit a few phases/tasks from the website project development example above. Using a Work Breakdown Structure and analyzing past project data, you may have something that looks like this:

PhaseTasksHours to complete
Design– Create wireframes (4hrs)
– Create mockups (4hrs)
– Create brand guidelines (8hrs)
16hrs
Development– Build a WordPress theme (10 hours)
– Build a desktop and mobile version of all pages (20 hours)
30hrs
Testing– Test functionality of the website (8hours)
– Update/test plugins (2 hours)
10hrs

Just remember, the amount of time a task could change once you dig into the actual work. So it’s wise to have a change management process in place when completing projects.

Estimates can be pretty dry and boring to review. 

So before you send them out to clients and other stakeholders (in the next step), map your estimates into a timeline

Toggl Plan timeline

Timelines helps you adjust the estimated milestones and deadlines based on:

  • Weekends, public holidays, and planned off days
  • Your team’s capacity considering their already planned work

In addition, it also gives everyone involved a visual overview of the project’s schedule. At the same time, it makes it easy to adjust your schedule and see its impact when you revise the schedule in the next step.

6. Review, revise, and finalize the estimate

This step is all about making sure the estimate is realistic, accurate, and achievable.

Use your best judgment, but don’t forget other valuable resources:

  1. Ask your team their opinion
  2. Potentially seek confirmation from experts in the field
  3. Review similar past projects 

Compare your current estimate to the overall time of past projects inside of Toggl Track.

Past project data inside of Toggl Track

Now that you’ve viewed past projects and spoke with a few key players–how does your estimate hold up?

If it’s much higher or lower than similar past projects, consider reviewing your estimates to determine why there’s a discrepancy.

Look through reports, ask any team members who provided insights on tasks during the estimation, and refine your total hours again.

Rinse and repeat until that estimation is shining.

Deliver projects on time with accurate estimates

Estimating time for a project is crucial to success but that doesn’t mean you need to feel intimidated.

In this article, you’ve learned:

  • What time estimation is?
  • Why is it critical to delivering projects on time?
  • And the 7 steps to create accurate estimates for a project

Consider the dreaded planning fallacy, line up every task involved (even the sneaky ones like correspondence), add in some contingency cushions, and compare the total estimate to past projects.
For the next step in your project’s life cycle, check out our starter guide to project planning.

July 29, 2022