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Lecture Project management: The managerial process (6/e) - Chapter 5: Estimating project times and costs

The main contents of chapter 5 consist of the following: Factors influencing the quality of estimates; estimating guidelines for times, costs, and resources; top-down versus bottom-up estimating; methods for estimating project times and costs; level of detail; types of costs; refining estimates; creating a database for estimating. | Project Management 6e. 5-1 5–2 Where We Are Now Project Management 6e. 5-2 5–3 Estimating Projects Estimating The process of forecasting or approximating the time and cost of completing project deliverables. The task of balancing expectations of stakeholders and need for control while the project is implemented. Types of Estimates Top-down (macro) estimates: analogy, group consensus, or mathematical relationships Bottom-up (micro) estimates: estimates of elements of the work breakdown structure Project Management 6e. 5-3 5–4 Factors Influencing the Quality of Estimates Quality of Estimates Project Duration People Project Structure and Organization Padding Estimates Organization Culture Other (Nonproject) Factors Planning Horizon Project Management 6e. 5-4 5–5 Developing Work Package Estimates Preparing Initial Estimates Use several people to make estimates Assume normal conditions Use consistent time units Assume tasks are independent Make no allowance for contingencies Include a . | Project Management 6e. 5-1 5–2 Where We Are Now Project Management 6e. 5-2 5–3 Estimating Projects Estimating The process of forecasting or approximating the time and cost of completing project deliverables. The task of balancing expectations of stakeholders and need for control while the project is implemented. Types of Estimates Top-down (macro) estimates: analogy, group consensus, or mathematical relationships Bottom-up (micro) estimates: estimates of elements of the work breakdown structure Project Management 6e. 5-3 5–4 Factors Influencing the Quality of Estimates Quality of Estimates Project Duration People Project Structure and Organization Padding Estimates Organization Culture Other (Nonproject) Factors Planning Horizon Project Management 6e. 5-4 5–5 Developing Work Package Estimates Preparing Initial Estimates Use several people to make estimates Assume normal conditions Use consistent time units Assume tasks are independent Make no allowance for contingencies Include a risk assessment Use people familiar with the tasks Project Management 6e. 5-5 5–6 Top-Down versus Bottom-Up Estimating Top-Down Estimates Are usually derived from someone who uses experience and/or information to determine the project duration and total cost. Are made by top managers who have little knowledge of the processes used to complete the project. 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. Project Management 6e. 5-6 5–7 Estimating Projects: Preferred Approach Make rough top-down estimates. Develop the WBS/OBS. Make bottom-up estimates. Develop schedules and budgets. Reconcile differences between top-down and bottom-up estimates Project Management 6e. 5-7 5–8 Top-Down Approaches for Estimating Project Times and Costs Consensus methods Ratio methods Apportion method Function point methods for software and system projects Learning curves Project .