Useful Estimates

I recently did a proposal tear-down for a coaching student (I’ll call him Chris). The proposal was for a client who has three silo’d software systems and Chris was proposing to consolidate everything into one system to alleviate a lot of inefficiency and frustration.

The proposal was pretty good overall, but there was one paragraph really rubbed me the wrong way. Here’s what Chris wrote:

The benefit from the system is not easy to substantiate financially. The savings of personnel time and the simplification of the computing infrastructure, although they will have long-term financial effect, cannot easily be measured. Instead, this is an investment of strategic importance.

Ouch. Just at the point where Chris should have been quantifying the value of the project to the client, he threw up his hands and said, “I have no idea how much money this project will save your business!”

Here’s the thing:

Just because something is hard to measure, doesn’t mean that you can’t make a useful estimate.

I suggested he change the paragraph to something like this:

Although it is hard to say exactly how much financial benefit the new system will provide, estimates can be made. We predict that the new software will save each user at least 1-2 hours of work per week. If you multiply that by 10 users making roughly $20/hr, and again by 50 working weeks per year, the software will save between $10k-$20k annually.

Naturally, Chris would be spit-balling the numbers somewhat, but the client can easily adjust up or down in his or her head. In any event, $10k-$20k is way better than “I have no idea how much you’ll save.” Having numbers–even estimated numbers–gives you something to anchor your price against, which makes it much easier to get your proposals approved.

P.S. There’s another angle to this situation that bears mention. Namely, that Chris should not have had to estimate the financial benefits at all. Instead, he should have had a conversation with the client before the proposal stage, during which he helped the client articulate what the project would likely be worth to the company.

But I’ll save that for another post.