What Decision Are We Supporting?

In business, we’re often asked for estimates with too little context to understand the request. When that happens, we’re likely to expect the worst–that our estimate will be treated as a “guarantee not to exceed” and we’ll likely be in trouble at some time in the future. Of course we think that; we’ve been burned too many times in the past. Our fear of the consequences will encourage us to spend far too much time and effort trying to get the estimate “right” so we won’t be blamed.

If an estimate is really an estimate, then we know that it’s “wrong” in the sense that the subsequent actual reality is unlikely to equal it. The estimate is a guess, perhaps an educated guess, predicting the future. Predictions are hard, especially about the future.

Given these problems with estimates, why do we bother to make them at all? (Continued)