Estimation and its types Flashcards
What is an estimate?
An estimate predicts values not yet known, often used in project planning to assess costs, time, or resources.
Name the different types of estimates.
Rough Order of Magnitude (ROM), Budget Estimate, Definitive Estimate, Parametric Estimate, Analogous Estimate, Bottom-Up Estimate.
What is a Rough Order of Magnitude (ROM) Estimate?
A high-level, preliminary estimate used in early project planning to give a rough idea of cost or effort involved, often with a wide range of uncertainty.
What are some characteristics of ROM estimates?
They are approximate, quick to assess, based on limited information, communicated to stakeholders, and subject to change.
What is an example of a ROM estimate for a construction project?
If the average cost per square foot is 175 INR, and the total area is 10,000 sq. ft., the ROM estimate would be 1,750,000 INR.
How is a ROM estimate calculated for a software development project?
Based on similar projects taking 6 to 9 months, the ROM estimate for duration would be an average of 7.5 months.
What is an example of a ROM estimate for product manufacturing?
For producing 5,000 units with an estimated cost per unit of 50 to 70 INR, the ROM estimate would be approximately 300,000 INR.
What is a Budget Estimate?
A more refined estimate than ROM, used for preliminary budgeting, providing an early assessment of the project’s financial resources.
What is an example of a Budget Estimate for a construction project?
With costs for materials, labor, equipment, and overhead, the estimated budget totals 660,000 INR.
What is an example of a Budget Estimate for a product development project?
For a tech company developing software, the estimated budget is 300,000 INR, including R&D, testing, marketing, and other expenses.
What are the characteristics of a Definitive Estimate?
It includes a detailed scope, accurate quantities, reliable data, and a low level of risk, providing high accuracy (within 5% of actual costs).
What is a Definitive Estimate?
The most accurate estimate, produced later in the project lifecycle, involving detailed cost breakdowns and comprehensive planning.
When is a definitive estimate used?
During the final stages of project planning, after the scope is fully defined, to secure funding and approvals.
What is a definitive estimate?
A highly accurate cost estimate with detailed scope, comprehensive plans, reliable data, low risk, and limited assumptions, often used to secure project funding.
When is a definitive estimate typically prepared?
During the final stages of project planning after the project scope and requirements have been fully defined.
List three key characteristics of a definitive estimate.
Detailed scope, accurate cost breakdown, and high accuracy (within 5% of actual costs).
What is parametric estimation?
An estimation method using statistical relationships between known parameters, such as size and complexity, to estimate costs or time.
Provide an example of parametric estimation.
If building costs are $200 per square foot, and the project is 2,000 square feet, the estimated cost is 200 × 2,000 = $400,000.
What is analogous estimation?
A technique where a current project is estimated by comparing it to a similar past project and adjusting for differences.
Name two advantages of analogous estimation.
Quick to perform and useful with limited data during early project stages.
What is a potential drawback of analogous estimation?
It provides only rough estimates and relies on the accuracy of past project data.
What is bottom-up estimation?
A method where a project is broken down into smaller components, each component is estimated individually, and then all estimates are aggregated.
Why is bottom-up estimation considered more accurate?
It accounts for detailed tasks and components, allowing for precise resource and time allocation.
What are the steps involved in a bottom-up estimate?
Task identification, task estimation, aggregation of estimates, adding contingency, and review.
Give an example of a contingency buffer in a bottom-up estimate.
Adding a 20% buffer to the total estimate to account for unforeseen risks and changes.
