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Project Management>Estimating

 

An estimate can be best defined as:

'an assessment, based on skills, experience and judgement, of the time and resources required to successfully produce a deliverable'.
 

For many projects it will be necessary to estimate the costs involved to complete your project.  There are many ways to estimate project costs. The following are the estimating techniques you can use to estimate the cost of your project:

 

§         Analogy (comparing like for like projects)

§         Top-Down (used when fine detail not available)

§         Bottom-Up (used when fine detail available)

§         Expert Judgement (experts estimate the project)

§         Work Forward, Work Back (when project has a due date)

 

More details about each technique are provided below

 

Analogy
Estimate by comparing the current project costs with completed Projects costs, where you can base your estimate on the measure of time and resource used for the completed project.  The estimate is therefore based on actual experience rather than opinion, but will only be useful if the analogy is valid.  Analogy can a good wayto estimate costs provided the information is available and the two projects are comparable.

Top-Down

You list the major tasks that will need to be done for the Project to be completed.  Breaking the project into stages helps to identify these main tasks and the costs that will be involved.  You then use experience and judgement, to estimate the time and resources required for each task.  You would need to check the relative size of the estimates to ensure that each is logical and consistent.  Sum the results to give the overall estimate of the project costs. 

 

Usually used at an early stage in a Project when the overall outcome and approach is known, but the fine detail is unclear.  As it is a high level process, the result will not be precise, and may be best expressed as a range.  For example - "Project 'X' will require 200 to 350 days work effort and can be done in 10 to 20 weeks". Estimated resources costs will also be a range.

 

Bottom-Up

You need to identify each activity required to complete the Project and the resources and the elapsed time required to complete the activity. You would need to allow for normal staffing overheads (leave, training, sickness and so on). You would need to identify any known constraints (e.g. limited skills, staffing, fixed dates before which certain activities cannot begin, etc.). You can then build up activity totals into a detailed estimate for the Project.

 

Usually used when the fine detail of the Project components are well defined. Based on more information and done in more detail.  This type of estimate can be more precise than a top-down.

 

Expert Judgement

This is making an estimate based on expert judgement and not really an estimating technique. It requires the use of the output from any or all of the above techniques, but it is probably more useful when building top-down estimates. Essentially a number of experts independently estimate the Project. The results are reviewed and combined to provide a single best estimate.

 

Work forward, work back

Useful if you have an imposed end date.   From the imposed end date, work back with your estimates to today.  This will show if the timescale looks achievable.  If it doesn't, you can alert the Project Sponsor early and look for solutions - for example finding extra resource or scaling down the scope.

 

Go to Project Management Knowledge Base

See also

 

Go to Analysis Knowledge Base
Go to Process Change Knowledge Base
 

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