There are many different types of project estimation techniques used in Project Management with various streams like Engineering, IT, Construction, Agriculture, Accounting, etc. A
Project manager is often challenged to align mainly six project constraints - Scope, Time, Cost, Quality, Resources, and Risk in order to accurately estimate the project. The common questions that come into
the mind of a project manager at the start of the project are– We will next learn about the major parts of
the project estimation techniques. While accurate estimates are the basis of sound project planning, there are many techniques used as project management best
practices in estimation as - Analogous estimation, Parametric estimation, Delphi method, 3 Point Estimate, Expert Judgment, Published Data Estimates, Vendor Bid Analysis, Reserve Analysis, Bottom-Up Analysis, and Simulation. Usually, during the early stages of a project life cycle, the
project requirements are feebly known and less information is available to estimate the project. The initial estimate is drawn merely by assumptions knowing the scope at a high level, this is known as ‘Ball-park estimates’, a term very often
used by project managers. We will next learn about the top project estimation techniques. Project Estimation Techniques1. Top-Down EstimateOnce more detail is learned on the scope of the project, this technique is usually followed where high-level chunks at the feature or design level are estimated and are decomposed progressively into smaller chunks or work-packets as information is detailed. 2. Bottom-Up EstimateThis technique is used when the requirements are known at a discrete level where the smaller workpieces are then aggregated to estimate the entire project. This is usually used when the information is only known in smaller pieces. 3. Analogous EstimatingThis project estimation technique is used when there is a reference to a similar project executed and it is easy to correlate with other projects. Expert judgment and historical information of similar activities in a referenced project are gathered to arrive at an estimate of the project. 4. Parametric EstimateThis technique uses independent measurable variables from the project work. For example, the cost for construction of a building is calculated based on the smallest variable as the cost to build a square feet area, the effort required to build a work packet is calculated from the variable as lines of codes in a software development project. This technique gives more accuracy in project estimation. 5. Three-point EstimatingThis technique uses a mathematical approach as the weighted average of an optimistic, most likely and pessimistic estimate of the work package. This is often known as the PERT (Program Evaluation and Review Technique). 6. What-If AnalysisThis project estimation technique uses assumptions based on varying factors like scope, time, cost, resources, etc., to evaluate the possible outcomes of the project by doing impact analysis. In a usual scenario, the project estimate is done by conducting estimation workshops with the stakeholders of the project, senior team members who could give valuable inputs to the estimation exercise. The high-level scope is broken down into smaller work packages, components, and activities, each work package is estimated by effort and resources needed to complete the work package. The project may be detailed into the smallest chunk that can be measured. The following activities are done during the workshop:
Are you a professional who is aspiring to be a project manager? Check out the PMP Certification course now. The above exercise gives an exact estimate of the project and the outcome of the workshop may be a project plan and a project schedule with effort, resource, and cost estimates for pmp professionals. Happy learning! We wish you good luck with your PMP Certification Training journey! PMBOK®, PMP®, and PMI® have registered trademarks of the Project Management Institute, Inc. Which estimating techniques use historical data?Parametric estimating is quantitative and uses statistics to calculate the expected amount of resources needed to complete your project, whether it be cost or time, or even human resources. Project managers use parameters or characteristics based on historical data or past projects when calculating estimates.
What is analogous estimating technique?The analogous estimating technique uses information from similar projects to establish a cost estimate based on the data available. Analogous estimating needs to include expert judgement in order to establish reusability of the data. Analogous estimating is used where there is limited information about the project.
Which is an example of analogous estimating?This term refers to an estimation result that consists of a single absolute value. For instance, if the cost of a previous project used to be $100,000 and it is estimated that a new, similar project requires a similar budget, the analogous estimate would be $100,000, an absolute value.
What type of cost is incurred when a project must be conducted faster than normal and overtime?Which of the following is one of the cost drivers that serve as a basis of cost allocation? What type of cost is incurred when a project must be conducted faster than normal, and overtime for workers and / or extra charges for rapid delivery from suppliers are necessary? variable costs.
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