Validating The Project Estimate

A project manager should be familiar with the procedural and/or legal requirements associated with the use of project contingency. In many situations the owner thinks of the contingency as the amount of funding available to add more scope if need be. The project manager typically views the contingency, as funds to be tapped, if the project is delayed for whatever reason. Contingency should cover the uncertainty for risks that are difficult to estimate portions of the project. Therefore, it's important that the documentation surrounding the use of the contingency amounts is well documented. It will come in handy when meeting with the client on project changes.

When validating project estimates, check:

- Level of Detail In The Requirement Document

- The Method Of Estimating Utilized
- The Experience Of The Estimator

In any case, it is safe always to estimate a contingency value, that is the amount of “set a side” in dollars or hours, which is over and above the initial project estimate. This is necessary to cover risk related items and to provide coverage for items that were difficult to identify in detail during the time the estimate was prepared. Risk and contingency are interrelated, the higher the risk the greater need for contingencies.

Contingency estimating is a tricky process, and it's best to follow a process

-Verify mitigation approach or steps to the solution
-Consider the degree of uncertainty (subjective) associated with each
-Add a percentage amount 10, 20 % etc. The percentage amount is based on:
-Contract Provision