Undocumented Features

Estimates and Commitments

October 28, 2007 – 5:43 pm

My boss has a key idea that he is spreading to both our business and our clients:  the idea of estimates and commitments.  The definition for each should be obvious, but we often lose track of them in the business world.

An estimate is an educated guess, based on the knowledge currently on hand, of how long it will take to complete a given task.  Estimates give you an idea of what to expect.  As more is learned about the subject at hand, this will be revised until the point at which a commitment can be made.

A commitment is a promise that you will have something done by a given date.  When you make a commitment, you have given your word that others can make business decisions assuming that you will have what you have promised done by the date specified.  When you make a commitment, you do whatever it takes to get the job done.

Too often in the business world we mix these two things up.  We take estimates and start treating them like they’re commitments.  We get upset when estimates are revised.  We make business decisions based on estimates.

Too often in the IT world people mix it up in the opposite direction.  We worry about risks.  We keep revising estimates but never get to the point of making a commitment.  We cave under pressure and make commitments when we know we haven’t enough information to make the commitment.

Treating an estimate as a commitment, making a commitment before we know enough information, failing to give commitments- these are all failings that damage your business.  It can make you miss deadlines.  It can demoralize employees being held to unreasonable timelines.  It can lead to mistrust within your organization.  If you look at it analytically, your company only has two basic resources- time and money.  Not handling estimates and commitments correctly wastes your company’s time.

Would you ever:

• Give a customer a cost for widgets without knowing how much widgets cost you?  If you give commitments before you have estimates, you do just that.
• Write a vendor a check without checking your delivery to see if you got everything you ordered?  If you treat estimates as commitments, you’re doing just that.
• Insist on paying a vendor the same even if the vendor calls and says they can’t send everything you ordered?  That’s what you do when you don’t allow for revision of estimates.
• Allow a vendor to send your order when they get ready to?  This is what you do when you fail to deliver a timely commitment date.

Notice what that last point says.  In truth, far too many businesses do do this as a matter of business practice.  It causes me business problems and it irks me in my personal life.  Customers hate it.  Thus, even though it’s an ‘acceptable’ business practice, there it is on my list.  Don’t do this to your clients.  Show the integrity to commit.  Be better than the other companies out there.

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