Explain Approaches to Producing Estimates

Question 1

Estimating Techniques

Answer 1

Primary methods:

• Analytical (Bottom-up)
• Comparative (Historic/ Analogous)
• Parametric
• Program Evaluation and Review Technique (PERT/ 3- point)
• Delphi

Question 2

Analytical Estimating

Answer 2

• Uses the work breakdown structure
• Identifies levels of activity that can be readily estimated
• Once agreed, contingencies can be applied
• Overall project targets can be applied

Question 3

Comparative Estimating

Answer 3

• Uses historical date from similar projects
• Determines most appropriate cost and time
• compare by scaling based on:
  > size
  > complexity
  > type of technology

Question 4

Parametric Estimating

Answer 4

• Uses defined parameters to measure a project
• Goes from known costs, e.g. the time and cost to produce a single deliverable
• Multiplies up to estimate totals
• Typically used in statistical modelling
• Used by quantity surveyors

Question 5

PERT/3-Point

Answer 5

• During the 1950s on the design and production of the first nuclear powered submarine, an alternative approach to determining project durations, referred to as PERT (Programme Evaluation and Review Technique) was developed.

The PERT duration is calculated according to the following equation and represents a weighted average of the three points:

PERT Duration = O + (4 x Most Likely) + P / 6

Question 6

Delphi Estimating

Answer 6

• Generation of an estimate through individual expert judgement followed by facilitated team consensus

Steps:
> Gather experts
> pose the question )e.g. how long will it take)
> Obtain estimates from each expert individually
> Let estimates be seen and discussed by the group
> Get justification for those outside the norm
> Allow people to change their minds
> Arrive at consensus

Question 7

Explain the Reasons For and Benefits of Re-Estimating Through the Project Life Cycle

Answer 7

• Maintain stakeholder’s expectations > provides stakeholder confidence in project’s ongoing costs
• Hels in the preparation of resources > helps to avoid overuse/allocation of resources
• Helps to ensure that cash flows and budgets are in line with the latest expectations > provides stakeholder confidence in project cost control and budgeting

Question 8

Why is estimating important?

Answer 8

• To quantify requirements/scope
• To determine likely timescales
• To assess/re-assess the project’s viability
• To obtain funding
• As a basis for control
• To secure/ allocate resources
• To prepare tenders
• Any other reasons?