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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:
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Analogy (comparing like for like projects)
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Top-Down (used when fine detail not available)
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Bottom-Up (used when fine detail available)
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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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