About this lesson
The most commonly used techniques for creating project estimates are analogous estimates, bottom up estimates, three point estimates, and using a parametric model.
The most commonly used techniques for creating project estimates are analogous estimates, bottom up estimates, three point estimates, and using a parametric model. All of these techniques relay on some level of expert judgement and at least a tentative plan for how the work will be done.
When to use Estimating Techniques
Estimates are used to when planning a project or when replanning a project due to a change. This will occur at the beginning of a project or project phase.
There are many techniques that can be used. Listed below are the most common:
This technique bases the estimate on the experience of a similar project. It relies on someone having done this type of work before. This is a very quick technique, but the estimate is very dependent upon who is doing the estimating and their experiences.
Bottom Up Estimate
This estimate requires that the activities of the project be decomposed into very small “micro-tasks.” Smaller tasks are usually easier to estimate accurately because all of the work is understood and you can normally find someone who has done a similar “micro-task” and can provide you with an analogous estimate. An entire project estimated in this manner will have an accurate estimate, but it can take a long time – sometimes months – to decompose all the tasks into “micro-tasks”.
Three Point Estimate
This estimating approach is often used with project activities that have high uncertainty. The estimator creates three estimates for the task – a best case, a worst case, and a most likely case. Often these will be different due to differing underlying assumptions about the task. These estimates are then combined in one of two ways. Either the three are averaged, which is called a triangular estimate, or a weighted average is created that gives more weight to the most likely estimate which is known as the PERT estimate. The project plan is created using one of the average estimates, although PERT will create two alternative plans, one with all of the best case estimates and one with all of the worst case estimates. This provides insight into the level of uncertainty in the project.
In this case the experience of many projects has been codified into formula. The formula uses one or two parameters that are easily determined during project planning. By entering these parameters into the formula, a cost estimate or time estimate is derived. For instance, the time estimate on a shipping task may use a distance parameter in the formula.
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