After reading the material in this chapter, you should be able to: Understand that estimating can be carried out to differing levels of detail and accuracy, apply any number of estimating techniques to assist in scoping and planning a project, understand the concept of contingency versus padding.
Trang 1CHAPTER 6
Estimating Project,
Times and Costs
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Learning Elements
6.1 Understand that estimating can be
carried out to differing levels of detail
and accuracy
6.2 Apply any number of estimating
techniques to assist in scoping and
planning a project
6.3 Understand the concept of contingency
versus padding
Trang 3RECAP Leading on from Step 4 Estimating: Moving towards a draft budget and schedule
The journey from WBS to estimating and the creation of the budget schedule and resource matrix
ESTIMATING
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Pearson, Larson, Gray, Project Management in Practice, 1e
Estimates are needed to:
– Support good decisions
– Determine whether the project is worth doing
– Determine how long the project should take and its overall cost
– Schedule work
– Determine the resource required (human and
other)
– Develop time-phased budgets (cash flow)
– Establish the project baseline
– Determine how well the project is progressing
Trang 5What is being estimated?
• Resources
• Durations
• Costs
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Estimating Guidelines for
Time, Costs and Resources
Consider:
• Responsibility
• Use several people to estimate
• Normal conditions
• Time units
• Independence
• Contingencies
• Carrying out a risk assessment
• Cost of Quality (CoQ)
Trang 7Top-down versus Bottom-up
Estimating
Top-down approach
Are usually derived from someone who uses experience and/or information to determine the project duration and total cost.
Bottom-up approach
Can serve as a check on cost elements in the WBS by
rolling up the work packages and associated cost
accounts to major deliverables at the work package level.
Hybrid – phase estimating
Used when an unusual amount of uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project
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Methods for Estimating Project Costs, Time and Resources
• Consensus methods
• Expert judgment
• Alternative analysis
• Parametric estimating
• Analogous method
• 3-point estimate
Trang 9Methods for Estimating Project Costs, Time and Resources (cont.)
• Vendor bid analysis
• Estimating tools and systems
• Function point methods
• Learning curves
• Template methods
• Range estimating
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Analogous Estimating
‘Analogous estimating is a technique for
estimating the duration or cost of an activity
or a project using historical data from a
similar activity or project
‘Analogous estimating uses parameters from
a previous, similar project, such as duration, budget, size, weight, and complexity, as the basis for estimating the same parameter or measure for a future project.’
(PMI 2013, p 169)
Trang 11Parametric Estimating
‘Parametric estimating is an estimating
technique in which an algorithm is used to
calculate cost or duration based on historical data and project parameters
‘Parametric estimating uses a statistical
relationship between historical data and other variables (e.g square footage in construction)
to calculate an estimate for activity
parameters, such as cost, budget and
duration’
(PMI 2013, p 170)
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Three-point Estimate
Optimistic + (4 x Most Likely) + Pessimistic
6
Also known as the PERT method.
Trang 13Summary of Estimating Tools
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Level of Detail in Estimating
The estimating trumpet
Trang 15Refining Estimates
Reasons for adjusting estimates
• Interaction costs are hidden in estimates.
• Normal conditions do not apply.
• Things go wrong on projects.
• Changes in project scope and plans.
Adjusting estimates
• Time and cost estimates of specific activities are adjusted as the risks, resources and situation
particulars become more clearly defined.
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Key Terms