Gartner Research

Estimating the Time and Cost of ERP and ERP II Projects: A 10-Step Process

Published: 26 September 2001

ID: G00101222

Analyst(s): Frances Karamouzis , Brian Zrimsek, Pat Phelan


Management Summary Enterprises implementing enterprise resource planning (ERP) and ERP II systems remain at a high risk of project cost overruns and missed deadlines. Gartner estimates that, for 40 percent of enterprises deploying ERP or ERP II systems through 2004, the actual time and money they spend on these implementations will exceed their original estimates by at least 50 percent (0.7 probability). Many enterprises have suffered spectacular project failures due to unplanned or underplanned implementation projects. A key component of the planning required to avoid such failures is the development of a reliable estimate of implementation project costs and duration. This process must go beyond simple "rule of thumb" metrics and vendor cost promises. Enterprises must produce an accurate estimate of -- and ultimately, a detailed work plan for -- project costs, duration and resource needs before the implementation process begins. This Strategic Analysis Report provides a 10-step process for enterprises to use to produce a reliable estimate of the costs and duration of implementation projects for ERP (and for the traditional ERP components of ERP II). It provides detailed guidance on a range of critical time and cost areas associated with implementation activities, many of which are often overlooked in estimation efforts. They include: o Process design o Core and supplemental staffing needs o Data conversion o Customization and interface development o End-user training o Project management o Pilot deployment and rollout to remote sites Not only will this 10-step process provide significant assistance in producing a reliable estimate, but the information gathered during the process will also form the foundation for detailed work-planning activities. The statements of work, estimates and assumptions generated can be carried forward into the development of a detailed implementation work plan. This 10-step approach is based on the assumption...

Table Of Contents
  • Management Summary
  • Introduction
  • Ten Steps for Developing an ERP Implementation Cost Estimate
    • Step 1: Define the Scope of the Project
    • Step 2: Estimate Staffing to Lead the Project and Support Each Process Area
    • Step 3: Estimate Custom and Interface Development
    • Step 4: Assess Data Conversion Magnitude
    • Step 5: Estimate Project Duration
    • Step 6: Assess External Connectivity Requirements
    • Step 7: Estimate Supplemental Staffing
    • Step 8: Create a Time-Phased, Resource-Loaded Project Plan
    • Step 9: Estimate Resource Rates and Apply Them to the Plan
    • Step 10: Estimate Travel, Contingency and Final Project Costs
  • Conclusion

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