Rough order of magnitude rom budget definitive types

This preview shows page 9 - 20 out of 39 pages.

Rough Order of Magnitude (ROM)BudgetDefinitive
Types of Cost EstimatingRough Order of Magnitude (ROM)Very early in the project life cycle.Provides rough ballpark of cost for selection decisions.•Support proposals requests for “Not to exceed” funding.During conceptual and early planning phases.Analogous, Parametric.+ 75% / 25%BudgetPuts dollars in the budget plans.Planning phase.Expert Judgment, Parametric+ 25% / -10%DefinitiveProvides details for purchases, estimate actual costs.Estimates actual costs and revenue for operating plan+ 10% / -5%
Estimating MethodsBottom-Up estimating: People doing work estimate based on WBS, rolled up into project estimate [slow, most accurate]Analogous (Top Down)estimating : Managers use expert judgment or similar project costs [quick, less accurate]Parametric estimating: Use unit model (i.e. cost per sq m). [accuracy varies] Two types:Regression analysis: based on analysis of multiple data pointsLearning Curve: The first unit costs more than the 100th, forecasts efficiency gains
Estimating MethodsOne Point EstimateThree Point EstimateProgram Evaluation and Review Technique (PERT)Most likelyOptimisticPessimisticPERT (Cost estimate) =(P+4M+O)/6
Plan Cost ManagementEstimate Cost Determine Budget Control CostEstimate Cost DetermineBudgetControlCostCost Management ProcessesPlan Cost Management
Plan Cost ManagementInputsOutputsTools & TechniquesInitiatingPlanningExecutingM&CClosingProject CharterProject Management PlanEnterprise Environmental FactorsOrganizational Process AssetsExpert JudgmentData AnalysisMeetingsCost Management Plan
Cost Management PlanA cost management planis how to establish and effectively manage the project to the cost baseline.“Integration Management” Describes how to manage cost variances on the project.Reporting formatEstimation methods/ componentsWho is involvedAuthority system and Authorization
Project Cost Management ProcessesCost estimating:Developing an approximation or estimate of the costs of the resources needed to complete a task or project.Cost budgeting:Allocating the overall cost estimate to individual work items to establish a baseline for measuring performance.Cost control:Controlling changes to the project budget.
Cost estimating: developing an estimate of the costs and resources needed to complete a project.Estimate Cost
Estimate CostInputsOutputsTools & TechniquesInitiatingPlanningExecutingM&CClosingProject Management PlanProject DocumentsEnterprise Environmental FactorsOrganizational Process AssetsExpert JudgmentAnalogous estimatingBottom up estimatingParametric estimatingThree point estimatingProject management Information SystemData AnalysisDecision MakingProject Documents UpdatesCost EstimatesBasis of Estimates
Determine Budget

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture