projcet estimate

projcet estimate - CHAPTER 15 ESTIMATING METHODS 1....

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CHAPTER 15 ESTIMATING METHODS 1. INTRODUCTION Several techniques are available to help the estimator estimate the cost of a project. Guidance on techniques may be found in the DOE Order 5700.2, COST ESTIMATING, ANALYSIS, AND STANDARDIZATIONS. Based on the project’s scope, the purpose of the estimate, and the availability of estimating resources, the estimator can choose one or a combination of techniques when estimating an activity or a project. Estimating methods, estimating indirect and direct costs, and other estimating considerations are discussed in this chapter. 2. ESTIMATING METHODS The following briefly describes techniques used to estimate. A. Bottoms-Up Technique Generally, a work statement and set of drawings or specifications are used to “take off” material quantities required to perform each discrete task performed in accomplishing a given operation or producing an equipment component. From these quantities, direct labor, equipment, and overhead costs are derived and added. This technique is used as the level of detail increases as the project develops. B. Specific Analogy Technique Specific analogies depend upon the known cost of an item used in prior systems as the basis for the cost of a similar item in a new system. Adjustments are made to known costs to account for differences in relative complexities of performance, design, and operational characteristics. C. Parametric Technique Parametric estimating requires historical data bases on similar systems or subsystems. Data is derived from the historical information or is developed from building a model scenario. Statistical analysis is performed on the data to find correlations between cost drivers and other system parameters, such as design or performance parameters. The analysis produces cost equations or cost estimating
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15-2 DOE G 430.1-1 03-28-97 relationships that can be used individually or grouped into more complex models. This technique is useful when the information available is not very detailed. D. Cost Review and Update Technique An estimate is constructed by examining previous estimates of the same project for internal logic, completeness of scope, assumptions, and estimating methodology and updating them with any changes. E. Trend Analysis Technique A contractor efficiency index is derived by comparing originally projected contract costs against actual costs on work performed to date. The index is used to adjust the cost estimate of work not yet completed. F. Expert Opinion Technique When other techniques or data are not available, this method may be used. Several specialists can be consulted repeatedly until a consensus cost estimate is established. 3. DATA COLLECTION AND NORMALIZATION When estimating, cost data is collected. Data may be collected from similar projects, data bases, and published reports. The basis of the cost data should be documented as part of the detailed backup for the estimate. The amount of data collected will depend on the time available to perform the estimate and the type of estimate, as well as the budget
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This note was uploaded on 05/18/2010 for the course MGMT 430 taught by Professor Besty during the Spring '10 term at DeVry Irvine.

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projcet estimate - CHAPTER 15 ESTIMATING METHODS 1....

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