oOrganization culture shapes every dimension of project managementOthersoNon-project factors can impact time and cost estimates. E.g: equipment downtime, National holidays, vacations,legal limits, resources assignments because project priority.5.2 Estimating Guidelines for Times, Costs, and ResourcesManagers recognize time, cost, and resource estimates must be accurate if project planning, scheduling, and controlling are to beeffective.Seven guidelines to develop useful work package estimatesResponsibility:oEstimates should be made by the person(s) most familiar with the task, those responsible for getting the job doneon schedule and within budget. They will give an estimate based on experience and best judgmentoA secondary benefit, they will “buy in” to seeing that the estimate materializesUse several people to estimateoEstimates has a better chance of being reasonable and realistic when several people with relevant experienceand/or knowledge of the task are used (sometimes called “crowdsourcing”). Discussions of the individualdifferences in their estimates leads to consensus and eliminates errorsNormal conditionsoEstimates should be based on normal conditions, efficient methods, and a normal level of resourcesoNormal conditions mean for example: 8 working hours per day, two-shift a day, normal level of resources,equipment availabilityTime unitsoAll task time estimates need consistent time units. E.g: days, workdays, workweeks, person days, single shift, hours,minutes (E.g: a heart transplant operations probably is expressed in minutes)IndependenceoEstimators should treat each task as independent of other tasksoUse of first-line managers usually results in considering tasks independentlyoIf tasks are in a chain and performed by the same group or department, it is best not to ask for all the timeestimates in the sequence at once to avoid the tendency for a planner or a supervisor to look at the whole pathContingenciesoWork package estimates should not include allowances for contingencies. The estimate should assume normal oraverage conditions.oTop management needs to create an extra fund for contingenciesAdding risk assessment to the estimate helps to avoid surprises to stakeholdersoIdentifying the degree of risk lets stakeholders consider alternative methods and alter process decisionsoAdd a breakdown by optimistic , most likely, and pessimistic for task5.3 Top-Down versus Bottom-Up EstimatingTop-down estimates usually are derived from someone who uses experience and/or information to determine the project durationand total cost, usually made by top managers with little knowledge of the component activities used to complete the project.
Bottom-up estimates establish low-cost, efficient methods. The bottom-up approach at the work package level can serve as a checkon cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables. Also, provides thecustomer with an opportunity to compare the low-cost, efficient method approach with any imposed restrictions.