A Guide to Project Management

To the a guide to the resource planning involves

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: quare, PA 19073-3299 USA NAVIGATION LINKS ACROYMNS LIST ACRONYMS LIST 87 ACROYMNS LIST Chapter 7--Project Cost Management ment ment geE L geE PL P 7.2.2 Tools and Techniques for Cost Estimating .1 Analogous estimating. Analogous estimating, also called top-down estimating, means using the actual cost of a previous, similar project as the basis for estimating the cost of the current project. It is frequently used to estimate total project costs when there is a limited amount of detailed information about the project (e.g., in the early phases). Analogous estimating is a form of expert judgment (described in Section 7.1.2.1). Analogous estimating is generally less costly than other techniques, but it is also generally less accurate. It is most reliable when a) the previous projects are similar in fact and not just in appearance, and b) the individuals or groups preparing the estimates have the needed expertise. .2 Parametric modeling. Parametric modeling involves using project characteristics (parameters) in a mathematical model to predict project costs. Models may be simple (residential home construction will cost a certain amount per square foot of living space) or complex (one model of software development costs uses thirteen separate adjustment factors, each of which has five to seven points on it). Both the cost and accuracy of parametric models vary widely. They are most likely to be reliable when a) the historical information used to develop the model was accurate, b) the parameters used in the model are readily quantifiable, and c) the model is scalable (i.e., it works as well for a very large project as for a very small one). .3 Bottom-up estimating. This technique involves estimating the cost of individual activities or work packages, then summarizing or rolling up the individual estimates to get a project total. The cost and accuracy of bottom-up estimating is driven by the size and complexity of the individual activity or work package: smaller activities increase both cost and accuracy of the estimating process. The project management team must weigh the additional accuracy against the additional cost. .4 Computerized tools. Computerized tools, such as project management software, spreadsheets and simulation/statistical tools, are widely used to assist with cost estimating. Such products can simplify the use of the tools described earlier and thereby facilitate rapid consideration of many costing alternatives. .5 Other cost estimating methods. For example, vendor bid analysis. 7.2.2 | 7.3.1.2 7.2.3 Outputs from Cost Estimating .1 Cost estimates. Cost estimates are quantitative assessments of the likely costs of the resources required to complete project activities. They may be presented in summary or in detail. Costs must be estimated for all resources that will be charged to the project. This includes, but is not limited to, labor, materials, supplies, and special categories such as an inflation allowance or cost reserve. Cost estimates a...
View Full Document

Ask a homework question - tutors are online