7 steps to a better project estimate brief and costing
Whether you use spreadsheets or an automated / integrated marketing project management service platform, the important thing is to get your estimating discipline right from the start. Whether you're developing an estimate for in-house digital projects or for your clients, a lack of accurate estimating will lead to an impact on your profitability and credibility for future projects. By ‘accurate’ I mean estimates that factor in all the resources / roles and time that will be required to meet the project objectives and at rates that the business has set to achieve a desired profit.
Underestimating the time required, the numbers of people involved and / or the level of seniority or experience required on a project is sometimes done deliberately (in the belief that only low costs will attract new work). That’s a commercial decision for you to make but my view is that you should add in the realistic time and people / roles required to deliver the solution. Don’t artificially reduce the real numbers of days that an element will take, just to make the estimated cost lower, be transparent about how your cost is arrived.
1. Start with the project plan or brief.
Interrogate it thoroughly and ask a lot of questions before you start to create the estimate. If the brief is, for whatever reason, ‘sketchy’ or the client can’t provide all the answers you need before you produce the estimate, then ensure you have a set of caveats detailed.
2. Triangulate your thinking.
With experience, you can create accurate estimates for the many types of projects a digital agency might take on without sense checking with others. But it’s still good practice to triangulate your assumptions or calculations with other colleagues before sharing with a client or prospect, so get your thinking sense-checked before you email the proposal to the client. Have you been clear enough in detailing what the costs cover? Have you allowed for any contingencies? Have you applied the right day rate to each individual?
Building in triangulation and then approval for all estimates into a workflow is a good approach to take from day one. Most of the platforms allow for that type of workflow but you can still do that with spreadsheets and email. Or you could use collaboration tools like Basecamp, Minigroup or Google docs in-house to track colleague input and approval before publishing estimates externally.
3. Caveat your estimate.
Be clear what is included in your costings and equally clear what isn’t.
For example, ‘This estimate covers a microsite of ten pages as detailed in your brief but does not cover content creation, ongoing optimisation of the site or hosting. If you require these services (not detailed in the brief) please confirm and we can cost for those separately."
If you can’t accurately estimate all the costs at the time of estimate creation then detail that (but provide a ballpark range if possible).
For example ‘Video Production: depending on the research results from our proposed Discovery stage, we may find that a series of videos will aid your new product website. Video production has a range of factors that will affect an estimate: the number of films, length of each, ‘production quality’, use of actor or one of your staff etc. To that end we have provided a ballpark range only at this stage. More detailed costs will be provided after the Discovery stage and discussions with you.’
4. Define roles
Make sure you allow for all the roles that might be involved in the project. Rarely do designers work in isolation or liaise direct with the client, Social Media or PPC execs won’t necessarily write the most compelling call-to-action copy etc. So allow for the input (albeit however brief) from copywriters, account handlers / client service, project management, front end and back end developers etc. Sounds obvious but these ad hoc elements can often be forgotten on a project estimate. You can add these in per itemised ‘task’ (to build the overall project) or you could apply client service and project management elements to the whole project at (say) between 10% and 15% of the overall estimated time.
Whoever you add into a task/deliverable element, explain their role to the client (this can be in a key or in the summary notes) otherwise their involvement may be challenged. Why do you need both an account handler and a project manager at different stages of a project? Why is a copywriter required as well as a technical SEO operative? Give the client guidance as to what each expert contributes to the success of their project.
5. Look backwards.
Where available, look at past similar projects and learn from their success (or not) in terms of delivering against the brief as per the estimated timescale, with the resources that were forecast and resulting in a profitable project. Using a 3rd party project management platform allows you to build up a bank of previous estimates and analyse how these compared to the actual resources and time required to deliver the project.
6. Decide what rates to use.
There are different factors that determine an hour or day rate per (specialist) role : the experience of the individuals (which can attract a premium), market ‘norms’ (and how competitive you believe you need to be), the overheads that role attracts (e.g direct salary costs and any indirect costs e.g equipment that type of role needs), the number of expected billable hours for that role in a financial year and % contribution you want each role to make to overall profit.
And you may have agreed different rates for key clients, based on the volume of work they provide you or if there is a mix of project and retainer fee work running throughout the year. Applying an hourly or day rate to each task, via the specialists who will fulfil that task, is just one way of creating estimates though (see later).￼
7. Don’t give away your thinking.
It can be easy to overlook thinking and strategy development time at estimate stage. The client may brief you with ‘design the build a new website for us’ and you’ll immediately think of designer, developer and project manager time.
But it’s the Insight into who will use the site (via Personas) and what motivates them etc that will make the difference, amongst other things like great UX and ongoing optimisation, to the site’s long term success for the client. That insight only comes from thorough Discovery activity (and all the market / consumer / brand research that entails) and that shouldn’t be provided free of charge. So ensure you have Discovery and Insight (flexed per project / client objectives of course) within your estimates.
Underestimating the time required, the numbers of people involved and / or the level of seniority or experience required on a project is sometimes done deliberately (in the belief that only low costs will attract new work). That’s a commercial decision for you to make but my view is that you should add in the realistic time and people / roles required to deliver the solution. And then, if you believe it needs to be more ‘buyable’ by the client, adjust the overall cost estimate to offer some ‘goodwill’ or a discount. Don’t artificially reduce the real numbers of days that an element will take, just to make the estimated cost lower, be transparent about how your cost is arrived at even if higher than the (goodwill/ investment) cost you supply as a bottom line figure to the client.
Recommended Template: Marketing agency costing and budgeting models
Agency and client marketing can use these spreadsheets to estimate the cost for design and build or marketing activities as part of budgeting.
Mark Kelly is a digital marketing and agency growth consultant working with agencies and their client brands. He can be found at Mark Kelly Consultancy. You can follow him on Twitter or connect on LinkedIn.
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