Bottomup Estimating

This technique relies heavily on the WBS approach. It is a useful method, often used due to its accuracy and ability to roll up the project costs from the lowest level to the higher levels by referencing it against the WBS. Both time and cost are allocated against each WBS item, and SMEs provide specialist input. When this process is completed, the costs roll up to each subsequent higher level. Eventually, a total project cost is determined (see Figure 5.8). It must be noted that it can be difficult to use this method on a project where the scope was not fully determined (i.e., Research and Development—R&D project).

Figure 5.8: Bottom up estimating Phased Estimating

It is probable that the technological nature of many projects, such as R&D projects, makes it extremely difficult to estimate the entire project effort accurately. In these circumstances, the only approach still open to the project manager is to provide a project estimate on a phase-by-phase basis. This is often difficult for a client to accept, let alone understand, as the client requires the complete project dollar value for cash flow and budgetary purposes. To this end, it often appears to the client that the project team is unwilling to accept the project risk.

Phased estimating can actually be in the client's best financial interest due to the fact that the client is now able to review each project phase at specific intervals. In reality, the client remains in full control and could either stop or reject the project at any stage if unsatisfactory results seem likely. For example, let's assume that an investor has asked a software company to develop a portable, handheld, medical artificial intelligence unit that can perform automated medical diagnosis for both human and animal life forms in real-time. The project manager, during the estimation process, would identify this project as a pure R&D project, and because of the undeveloped technology and applications required, would recommend that this project be estimated on a phase-by-phase basis.

Project Management Made Easy

Project Management Made Easy

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.

Get My Free Ebook

Post a comment