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Estimating Project Times and Costs
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EstimatingThe process of forecasting or approximating the time
and cost of completing project deliverables.The task of balancing
the expectations of stakeholders and the need for control while the
project is implementedCopyright 2011 The McGraw-Hill/Irwin.
McGraw-Hill/Irwin 5*Estimating Projects
Copyright 2011 The McGraw-Hill/Irwin.
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Copyright 2011 The McGraw-Hill/Irwin. McGraw-Hill/Irwin
5*EXHIBIT 5.1Estimates are needed to support good
decisions.Estimates are needed to schedule work.Estimates are
needed to determine how long the project should take and its
cost.Estimates are needed to develop time-phased budgets and
establish the project baseline.Estimates are needed to determine
whether the project is worth doing.Estimates are needed to develop
cash flow needs.Estimates are needed to determine how well the
project is progressing.Why estimating Time and Cost are
important
Copyright 2011 The McGraw-Hill/Irwin.
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Factors Influencing the Quality of EstimatesCopyright 2011 The
McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*Quality of EstimatesProject
DurationPeopleProject Structure and OrganisationPadding
EstimatesOrganisation CultureOther (Nonproject) FactorsPlanning
Horizon
Copyright 2011 The McGraw-Hill/Irwin.
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Estimating Guidelines for Times, Costs, and ResourcesCopyright
2011 The McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*Guidelines for
estimatingUse several people to estimateNormal conditionsTime
UnitsIndependence ContingenciesAdding risk assessment to the
estimateResponsibility
Copyright 2011 The McGraw-Hill/Irwin.
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Estimating Guidelines for Times, Costs, and ResourcesHave people
familiar with the tasks make the estimate.Use several people to
make estimates.Base estimates on normal conditions, efficient
methods, and a normal level of resources.Use consistent time units
in estimating task times.Treat each task as independent, dont
aggregate.Dont make allowances for contingencies.Adding a risk
assessment helps avoid surprises to stakeholders.Copyright 2011 The
McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*
Copyright 2011 The McGraw-Hill/Irwin.
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Types of EstimatesTypes of EstimatesTop-down (macro) estimates:
analogy, group consensus, or mathematical relationships
Bottom-up (micro) estimates: estimates of elements of the work
breakdown structure
Copyright 2011 The McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*
Copyright 2011 The McGraw-Hill/Irwin.
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Top-Down or Bottom-up EstimatingCopyright 2011 The
McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*TABLE 5.1Conditions for
Preferring Top-Down or Bottom-up Time and Cost EstimatesCondition
Top-down Estimates Bottom-up EstimatesStrategic decision making X
Cost and time important XHigh uncertainty XInternal, small project
XFixed-price contract XCustomer wants details XUnstable scope X
Copyright 2011 The McGraw-Hill/Irwin.
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Estimating Projects: Preferred ApproachMake rough top-down
estimates.Develop the WBS/OBS.Make bottom-up estimates.Develop
schedules and budgets.Reconcile differences between top-down and
bottom-up estimatesCopyright 2011 The McGraw-Hill/Irwin.
McGraw-Hill/Irwin 5*
Copyright 2011 The McGraw-Hill/Irwin.
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Develop the Work Breakdown Structure (WBS)Copyright 2011 The
McGraw-Hill/Irwin. McGraw-Hill/Irwin 5*
Copyright 2011 The McGraw-Hill/Irwin.
