Also known as top-down estimating, apportioning begins with a total project estimate, then assigns a percentage of that total to each of the phases and tasks of the project. The work breakdown structure provides the framework for top-down estimating (as shown in Figure 8.2). Making useful top-down estimates relies on some big assumptions, among them:
• Since apportioning is based on a formula derived from historical data of other, similar projects, the historic projects must be very similar to the project at hand for the formula to be accurate.
• Since apportioning divides a total project estimate into smaller pieces, it will be accurate only if the overall estimate is accurate.
Although apportioning is rarely as accurate as a bottom-up estimate, it is an appropriate technique for selecting which projects to pursue. Despite its wide accuracy variance, it allows a project selection
• Some types of projects break into consistent proportions.
• Firms that have developed standard work breakdown structure templates use past projects to create the apportioning formula.
• With a good high-level estimate, the formula shows how big each of the project phases and tasks should be.
• For example, if the total budget estimate is $40,000, that leaves $8,000 for requirements, $8,000 for design, and $24,000 for construction.
FIGURE 8.2 Work breakdown structure as a basis for apportioning.
committee to approximate the length of project phases; this information then helps the committee decide which projects can be initiated and executed during a given budget period (see Table 8.2).
Apportioning is a valuable technique when used in conjunction with phased estimating. During phase reviews, the formula for apportioning can use the figures from the actual cost/effort of completed phases to increase the accuracy of the order-of-magnitude estimate (see Figure 8.3). For instance, if the original top-down estimate dictated a phase-one cost of $75,000, and the actual phase-one cost was $60,000, this means that the overall project estimate should be reduced by 20 percent. Again, notice the need for an accurate apportioning formula.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.