PMPCh7.2 - Estimate Costs Flashcards
Question
Definition of Estimate Costs
process of developing an approximation of the monetary resources needed to complete project activities
Benefit of Estimate Costs
determines the amount of cost required to complete project work
What else is included in Estimate Costs
consideration of costing alternatives
How are Estimate Costs expressed
currency, hours, days
ROM Estimate
-25% - 75%, narrows later to -5%-10%
Costs include what?
labor, materials, equipment, services, and facilities, as well as special categories such as an inflation allowance, cost of financing, or contingency costs
Costs can be presented in what 2 forms
acitivity level of summary form
Insert ITTO 7.2
Insert ITTO
Input of Estimate Costs (7):
Input of Estimate Costs (7): Cost Mgmt Plan, HR Mgmt Plan, Scope baseline, Project schedule, Risk Register, EEF, OPA
TT of Estimate Costs (10) BATPE, Project Vendors Reserve the Cost of Group Decision Dinner:
Bottom-up Estimating, Analogous Estimating, Three-point estimating, Parametric estimating, Expert Judgement, Project mgmt software, Vendor bid analysis, Reserve Analysis, Cost of quality, Group Decision making techniques
Output of Estimate Costs(3) BAP (Batman and project vendors like to eat bimbimbap):
Output of Estimate Costs(3): Basis of cost estimates, Activity Cost estimates, Project doc updates
Input of Estimate Costs (7)CHORE SP: Cost Mgmt Plan
defines how project costs will be managed and controlled, level of accuracy
Input of Estimate Costs (7)CHORE SP: HR Mgmt Plan
staff attribute, rates, reward
Input of Estimate Costs (7)CHORE SP: Scope Baseline
project scope stmt, wbs, wbs dictionary. Project scope stmt: product description, acceptance criteria, key deliverables, project boundaries, assumptions, and constraints about the project. Assumption: direct vs indirect cost, Examples of other constraints are required delivery dates, available skilled resources, and organizational policies. WBS - relationships among all the components of the project and the project deliverables. Dictionary - detailed information about the deliverables and a description of the work for each component in the WBS required to produce each deliverable. Contains contractual and legal implications, such as health, safety, security, performance, environmental, insurance, intellectual property rights, licenses, and permits
Input of Estimate Costs (7)CHORE SP: Proj Schedule
determining the availability of staff, the number of staff hours required, and quantities of material and equipment needed to perform schedule activities. It is closely coordinated with cost estimating. Incl Activity duration estimates.
Activity Duration Estimates (part of Project Schedule, Input), from Time Mgmt
ex: Union labor with regularly expiring collective bargaining agreements ex: Union labor with regularly expiring collective bargaining agreements
Input of Estimate Costs (7)CHORE SP: Risk Register
consider risk response costs Threats/opportunities. Threats = negative risk, increase cost of project
Input of Estimate Costs (7)CHORE SP: EEF
Market conditions - what products, services, and results are available in the market, from whom, and under what terms and conditions. Published commercial information - Resource cost rate information is often available from commercial databases that track skills
Input of Estimate Costs (7)CHORE SP: OPA
Cost estimating policies,Cost estimating templates,Historical information, andLessons learned.
TT of Estimate Costs (10) BATPE: Bottom Up Estimating
a method of estimating a component of work. Detailed cost is then “rolled up” to higher levels for subsequent reporting
TT of Estimate Costs (10) BATPE: Analogous Estimating
Use previous, similar projects as the basis for estimating the cost of the current project. Used when limited amount of info about project, relies on expert judgement. Less costly, less time, less accurate. Ensure similar in fact and not appearance.
TT of Estimate Costs (10) BATPE: Three point estimating
considering estimation uncertainty and risk and using three estimates to define an approximate range for an activity’s cost: Most likely*4, optomistic, pessimistic….then take average = PERT
TT of Estimate Costs (10) BATPE: Parametric estimating (parachute from construction bldg)
statistical relationship between relevant historical data and other variables (e.g., square footage in construction) to calculate a cost estimate for project work. Higher levels of accuracy
TT of Estimate Costs (10) BATPEr: Expert Judgement
used to determine whether to combine methods of estimating and how to reconcile differences between them.
TT of Estimate Costs (10) Project Vendors Reserve the Cost of Group Decision Dinner: Project Mgmt Software
software applications, computerized spreadsheets, simulation, and statistical tools are used to assist with cost estimating
TT of Estimate Costs (10) Project Vendors Reserve the Cost of Group Decision Dinner:Vendor Bid Analysis
based on the responsive bids from qualified vendors, additional cost estimating work may be required of the project team to examine the price of individual deliverables and to derive a cost that supports the final total project cost.
TT of Estimate Costs (10) Project Vendors Reserve the Cost of Group Decision Dinner:Reserve Analysis
contingency reserves based on identified risks, rework is unknown and could be risk, can apply to activity or project…should be on cost documentation, part of cost baseline and overall funding requirements for project. Mgmt reserve not in cost baseline but part of overall project budget/funding reqt. When mgmt reserve is actually used, it is added to cost baseline, requiring approved change to cost baseline.
TT of Estimate Costs (10) Project Vendors Reserve the Cost of Group Decision Dinner:Cost of Quality (COQ)
Section 8…how much does it cost to ensure quality
TT of Estimate Costs (10) Project Vendors Reserve the Cost of Group Decision Dinner:Group Decision-Making Techniques
brainstorming, the Delphi or nominal group techniques…engaging team members to improve estimate accuracy and commitment
Output of Estimate Csots (3) BAP: Basis of Estimates
amount and type of additional details supporting the cost estimate. should provide a clear and complete understanding of how the cost estimate was derived. Ex: Documentation of the basis of the estimate (i.e., how it was developed), all assumptions made,any known constraints, range of possible estimates (e.g., 10,000 (±10%) to indicate that the item is expected to cost between a range of values), and Indication of the confidence level of the final estimate.
Output of Estimate Csots (3) BAP: Activity Cost Estimates
quantitative assessments of the probable costs required to complete project work in summary form or in detail, for all resources like direct labor, materials, equipment, services, facilities, information technology, and special categories such as cost of financing (including interest charges), an inflation allowance, exchange rates, or a cost contingency reserve. Indirect costs, if they are included in the project estimate, can be included at the activity level or at higher levels.
Output of Estimate Csots (3) BAP: Project Doc updates
ie. risk register
