Even the wealthiest man in the world would ask for a discount in pricing at some point of time. That is the common nature of human. Through this process, we are making sure that we are paying the right amount of money for the value we are getting.
As a PreSales professional, when we are talking with customer, we should expect this at any point of time. For responding confidently we should understand the value we deliver. To have that understanding, you should understand the magic happening behind the curtain for estimating projects.
Yes, you should know, on what grounds estimations are prepared and what models are being followed. You don't have to be technical to understand it. Just a logic is enough.
An estimation should give us visibility on the following fronts
Effort required to complete a project
There are a number of different estimation models that are being used to make accurate estimates. Some of the most common models include:
Parametric models: These models use historical data to estimate the time and resources required for a new project.
Work breakdown structure (WBS): This is a method of breaking down a project into smaller, more manageable tasks. Each task can then be estimated independently, and the estimates can be combined to get a total estimate for the project. Since the estimations are detailed, anyone who sees it will get an idea about efforts going to each areas. From a sales perspective, it will help to negotiate on numbers and features.
3-point estimates: This method involves estimating the time and resources required for a project using three different values: the optimistic, most likely, and pessimistic estimates. The final estimate is then calculated using a weighted average of these three values. This is also a great model to follow with as it gives the flexibility to change numbers based on the complexities and visibility at a point.
Similarly, there are a number of models like Delphi, Planning Poker, PERT etc. Since a lot of literatures are available in the internet regarding the same, I am not going into that.
From a PreSales perspective, the point of interest here is to have a high level understanding of model. Here is how it is going to help us.
Optimize on cost, timeline, resources and scope
Add an extra buffer if required
Re-align on costs as per customer demands
Bump up the scope for an extra markup.
Here are few scenarios that we will come across
At times the risk factor considered during estimations are on the higher side. This can lead to higher costs.
At times the complexities considered are also on higher side. This can also lead to higher costs and extended timelines.
At times, the buffer we have considered may be on the lower side. This can lead to project risks.
At times, the resource considered for the project may not be accurate. This can lead to higher numbers or delayed timelines.
At times the scope considered may not be accurate. This can result in unrealistic numbers.
PreSales will come across a number of scenarios while discussing on the numbers with the customer and we will be pushed deep dive into estimation to find every optimisation opportunity.
On the other hand, understanding about estimations will help us to unwrap more opportunities with customer. Eg: If we identify a particular feature having high business impact is being considered at basic level, we can push for an advanced version or even as a separate project. By this way, we can quote a larger number to customer.
From my personal experience, I would say that we should understand the estimations to have meaningful conversations.