Labor is one of the most difficult items to estimate. Before I got into this business I was a senior manager for a large software company. I was responsible for major project running into the millions of dollars. I had to estimate labor cost for projects that could run for months with vague requirements. I used statistics to estimate my cost and we made money on almost every project. The ones we were over on were never more than 10% over or estimate. The math is not that hard.
1. First I developed three estimates for my labor cost. A.is the best case. B. the most likely time and C. the worst case.
2. Next to get my initial estimate I take .2 x best + .6 x likely + .2 x worst
So if my estimates were 4 hours best case, 7 hours likely and 12 hours worst, my initial estimate would be .2*4+.6*7+.2*12 = 7.4
Now this is not your estimate, for those of had statistics you will remember the bell curve. The estimate of 7.4 hours only gives you a 50/50 chance of being right.
Next we find an approximation for the standard deviation which would be the difference of the extremes multiplied by their probability;
sd = (worst case) x (probability of worst case) - (best case) x (probability of best case)
sd = .2*12 - .2*4 = 1.6
Using normal distribution tables;
+/- one standard deviation 68% confidence interval
+/- two standard deviation 95% confidence interval
+/- three standard deviation 99% confidence interval.
So what does all this mean. If we take two times the standard deviation or in our case 1.6 * 2 = 3.2 and add it to our initial estimate of 7.4 which gives us 10.6 hours we can say with a 95% chance that our labor hours will be less than 10.6 hours.
This works, you don't stay in your job long losing money on million dollar projects.