The art of estimating the cost and schedule aspects of a project a fraught with problems. The primary issue is the belief that estimates are either credible or completely worthless. Both extremes are wrong of course. But a reality check needs to be taken, before understanding how estimates can be put to use.
Let's start with a simple estimating process. "What will the price of a carton of eggs be in 5 years with a standard error of 15%?" This error value is the difference between a 50% confidence and an 80% confidence. The 80% confidence means you'll have enough money to buy a dozen eggs five years from now, you'll need to put away 15% more than the expected price.
So now let's scale this up to a $100M ERP project or a $1B flight avionics system, or something even bigger. The cost growth in many of these programs usually results from optimistic assumptions.
Accept and Control These Variance, Don't Try to Escape from Them
In most environments risk and uuncertainty are considered bad news. Bad news by the stakeholders. Bad news from the participants. If all the participants fail to acknowledge that things may not proceed as planned, the result is the core of project trouble.
With the sources from the previous posts, risk and uncertainty must be embedded in the project management process.
