Analyzing Basis of Estimates for Projects
There are times that you need to come up with estimates for projects. When you are trying to determine the total amount that each activity in your project will cost, you need to let stakeholders know why you have arrived at that particular estimate for your project. You can only do that by creating the basis of estimates for your project. That is exactly what I want to show you how to create in this article. Basis of estimates for projects are supporting and additional information needed to justify cost estimates.
Details of this basis of estimates can include the project scope, justification for the estimate, assumptions /constraints, confidence level of the estimate, and expected range of estimates among others.
Here are some of the advantages and disadvantages of estimating techniques for projects.
#1 ANALOGOUS ESTIMATE
This ensures that no work is inadvertently omitted from work estimates. It can be some times difficult for lower-level managers to apportion cost estimates to the project when an analogous estimating estimate is adopted. This is due to the fact that it requires historical experience to use it correctly.
#2 BOTTOM-UP ESTIMATING
This is very accurate and gives lower-level managers more responsibilities when using this kind of estimating technique. It may be time-consuming and can be used only after the Work Breakdown Structure has been well defined.
#3 PARAMETRIC ESTIMATING
This is not time-consuming as you just need to use a calculator or any other software for the estimation. They just have to input the figure into a software. It may be inaccurate depending on the integrity of the historical information used for the estimation.
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