I've been examining cost models a lot recently - the swathe of statistics, pivot tables and macros that help me decide if I should spend X on Y for Z reason. In most cases, I'll defer to a spreadsheet when I'm making major financial commitments. (Both professionally and personally - I know, I need to get out more). But one thing I tend to rely on most is instinct and experience. Because time and time again that's proven to deliver.
Take a major project I worked on in a previous role. We were building a major piece of software. I'd created the vision, the roadmap and - crucially - the budget. When I presented it to the rest of the board (who were all quite nervous given how much of a departure this type of project was from the firm's 'norm'), the first, and loudest, question was "how do you know it'll cost £ and take n weeks to deliver?"
My answer was simple: "because that's how much it will cost and that's how much time we have."
I was immediately asked to get comparable quotes.
So I did. And this is where the lesson, for me, reads greatest.
I had stipulated a budget of £380k and a timescale of 35 weeks. Why? Because that's what felt right. There's no simpler answer. My Excel wizardry confirmed I was about right, subject to the decisions I'd made. But I had three other entities quote the exact same brief. And what they came back with was:
1. One company suggested we'd need to allocate £550k and the process would take up to 50 weeks. 2. The second told us the same, basically. We would spend £600k and we'd be done in a year. 3. The third told us the 35 weeks was fine, if we'd allocate a £750k budget.
The average is £633k and 46 weeks. That's £253k and 11 weeks longer than I had predicted and, instinctively, gauged (guessed).
At this stage, most corporate structures would've encouraged (forced) me to revise (increase) my budget.
But I didn't.
And I delivered the project at +1.1% against my initial budget and -1.8% against my initial timeline.
Because that's what we had. And that's what we wanted to do. Similar to Google's revered 'moonshot' thinking, we could've played safe, we could've given ourselves a cushion. But we'd have then played safe. And we'd have spent the cushion. Instead, we had two aggressive targets - which pushed us to create aggressively innovative solutions to the challenges we faced on the way.