Estimating Techniques

Quick reference

• 00:04 Hi, I'm Ray Sheen.
• 00:06 I'd to talk with you about project estimating and
• 00:08 some of the more commonly used project estimating techniques.
• 00:14 >> Project plans incorporate estimates for
• 00:17 the amount of effort or cost of each task and the duration of each task.
• 00:21 These are what we use to build the budget and schedule.
• 00:24 There are many techniques used for
• 00:26 determining the likely required amount of costs, resources, effort and duration.
• 00:30 If your organization has a favorite, by all means use it.
• 00:33 In my experience, some of the more commonly used ones are expert judgement,
• 00:38 analogous, bottom up, three-point estimate and parametric modelling.
• 00:43 Others that are occasionally used are simulations, vendor bid analysis,
• 00:47 group decision making techniques, reserve analysis,
• 00:50 and even cost of quality analysis.
• 00:53 The most commonly used method is expert judgement,
• 00:57 the project team relies on the person with the most experience or
• 01:00 who is assigned responsibility for task to create the estimate.
• 01:04 Whatever that person says they need, that's what goes into the project plan.
• 01:08 However, when the project plan takes too long or costs too much,
• 01:12 one of the other techniques is often used to refine the estimate.
• 01:15 Let's go through some of the others that are commonly used.
• 01:19 The analogous estimate is the most common, in fact,
• 01:22 it's what's most experts used when providing their expert judgement.
• 01:25 It is an estimate that's based upon the actual cost of a similar project or
• 01:30 similar task.
• 01:31 The subject matter expert uses an example of a previous project
• 01:35 to explain why they have set the estimate at a particular level.
• 01:38 The more examples,
• 01:39 the subject matter expert uses, the more confidence in the estimate.
• 01:44 This is often a very good approach if we haven't yet
• 01:47 done detailed project planning.
• 01:49 Even without the details,
• 01:50 we know that certain types of activities will take this long and
• 01:53 cost this much because that is what has happened on the last five projects.
• 01:58 The caution with this approach?
• 01:59 It's essential for an analogous estimate to be accurate,
• 02:02 that the previous projects are truly similar to this current project.
• 02:07 The next technique is the bottom up estimate.
• 02:10 This technique is appropriate when you do have detailed plans.
• 02:13 In this technique, all the major deliverables are divided into smaller and
• 02:17 smaller tasks, until they are at the lowest level of activity or micro task.
• 02:23 This is often done with the work breakdown structure tool.
• 02:26 Small tasks are normally much easier to estimate
• 02:29 because the amount of work is defined unlimited.
• 02:32 The estimates for all the small tasks are added to get a project level estimate.
• 02:37 After deliverables are deployed into the micro task effectively,
• 02:41 this approach will give a very accurate estimate.
• 02:43 But it can also take a long time to develop.
• 02:46 However, many projects are not able to deploy the deliverables into micro tasks
• 02:50 because there is just too much uncertainty.
• 02:54 The final technique I wanna discuss is called parametric model.
• 02:57 In this case, the formula has been created and adopted by the organization for
• 03:01 estimating certain types of activities.
• 03:03 The formula uses one or more the project assumptions and constraints and
• 03:07 provides estimated value for effort cost or duration.
• 03:11 These models can be very simple or very complex.
• 03:14 They're normally developed over a long time for activities or
• 03:16 task that are conducted on most projects.
• 03:19 They are very common in some industries.
• 03:21 For instance, construction projects create estimates based upon the floor plan area,
• 03:26 or the number of occupants for building.
• 03:28 The accuracy of these estimates depends upon the amount of information that went
• 03:33 into the model, whether the parameters can be accurately estimated or derived, and
• 03:37 whether the model is scalable to be applicable to the effort of the project
• 03:41 being estimated.
• 03:43 >> Estimates are an important part of project planning.
• 03:46 And while we typically rely on the judgement of our subject matter experts,
• 03:50 there are other techniques that we can use
• 03:52 to help create additional confidence in the estimates.

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