What is Effort Estimation? Definition and meaning
Effort estimation is one of the most important tasks in project management. The fundamental success of a project depends on it. At the same time, it allows the profitability of the undertaking to be determined before expenditures are incurred or resources are consumed. Various methods exist for this purpose, such as the top-down or bottom-up approach.
Tasks of Effort Estimation
Effort estimation fulfils two tasks. On the one hand, it can serve as a decision criterion to assess whether a project can be carried out economically. On the other hand, it can be compared against the current effort tracking during the course of the project. By comparing estimated and recorded efforts, it is possible to assess whether the project is within the planned cost framework at the time of the assessment.
Effort estimation does not take place exclusively and entirely before the project begins. Often, at this point in time, only a rough estimate of the expected efforts can be made. Instead, this rough estimate is usually refined iteratively as the project progresses.
Effort estimation is also relevant for the quotation preparation of service companies. Here it serves as the initial cost estimate and thus as a basis for decision-making for the potential client.