Top-down vs bottom-up estimations
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When starting a new project, an important task for the project manager, is the estimation process. This can both be an estimation regarding cost and time-frames. It is important to get the project off to a good start, given that success of the project depends on the estimation - both in regards to time and cost. When estimating (or in other words 'predicting the future'), the project manager can use the following methods: | When starting a new project, an important task for the project manager, is the estimation process. This can both be an estimation regarding cost and time-frames. It is important to get the project off to a good start, given that success of the project depends on the estimation - both in regards to time and cost. When estimating (or in other words 'predicting the future'), the project manager can use the following methods: | ||
| − | + | - Top-down estimating <br /> | |
| − | + | - Bottom-up estimating | |
By choosing the top-down approach, the project manager chooses to make an overall scope of the project. From here, the major elements of the project is being listed and estimated separately. This approach creates a rough idea of the project size and the different timeframes of the project elements. The advantages of using the top-down approach is less time consuming and requires a limited amount effort. The estimates created by this method often turns out larger than the ones, which has been found using the bottom-up approach. <ref name="apm"> https://www.apm.org.uk/blog/three-ways-to-approach-cost-estimation/ </ref> <br /> | By choosing the top-down approach, the project manager chooses to make an overall scope of the project. From here, the major elements of the project is being listed and estimated separately. This approach creates a rough idea of the project size and the different timeframes of the project elements. The advantages of using the top-down approach is less time consuming and requires a limited amount effort. The estimates created by this method often turns out larger than the ones, which has been found using the bottom-up approach. <ref name="apm"> https://www.apm.org.uk/blog/three-ways-to-approach-cost-estimation/ </ref> <br /> | ||
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== Big idea - ''describe the tool, concept or theory and explain its purpose. The section should reflect the current state of the art on the topic'' == | == Big idea - ''describe the tool, concept or theory and explain its purpose. The section should reflect the current state of the art on the topic'' == | ||
| − | The term 'estimating' in terms of project management | + | |
| + | The term 'estimating' in terms of project management can be defined as "''the process of predicting the cost and time needed to deliver project products''". <ref name="study"> https://study.com/academy/lesson/top-down-bottom-up-estimating-techniques-in-project-management.html </ref> The estimation part is an important step on the way to a get a good product, which satisfies the costumer and/or the user, when it is delivered in the end. The estimation proces is used in order to predict the cost and the duration of a given project, which is making it possible to make the decisions, which will benefit the project. When estimating, it is also possible to make a decision regarding the viability of the project, when the financial requirements has been determined. <br /> | ||
The duration of a project is important to know in regards to costumer expectations and in order to know when the product can be delivered. From the estimation process, the project manager can use the determined time frames for time scheduling, which is relevant informations for interested stakeholders. During the project, the project manager can hold the real time data up against the estimated values in order to monitor the performance of the project. <ref name="study"/> <br /> | The duration of a project is important to know in regards to costumer expectations and in order to know when the product can be delivered. From the estimation process, the project manager can use the determined time frames for time scheduling, which is relevant informations for interested stakeholders. During the project, the project manager can hold the real time data up against the estimated values in order to monitor the performance of the project. <ref name="study"/> <br /> | ||
| − | Project estimations can be a fast task, but it can also be very time consuming. This all comes down to how the project manager wishes to prioritize the estimation, and is a decision on whether the time used on estimating is worth the effort in the end. The estimation process can be carried out by using the | + | Project estimations can be a fast task, but it can also be very time consuming. This all comes down to how the project manager wishes to prioritize the estimation, and is a decision on whether the time used on estimating is worth the effort in the end. The estimation process can be carried out by using top-down estimating as well as the bottom-up estimating. |
| − | + | ==== Top-down estimating ==== | |
| − | + | ||
| − | + | ||
| − | ==== Top-down | + | |
Top-down estimating, also refered to as analogous estimating, defines the way of estimating based on the information which is available about the project at the moment. The tool often uses similar projects as guide lines in regards to tasks, cost and project durations. The top-down approach is a fast and efficient way of estimating, but can leave out information, which is unique to the particular project, and the result can therefore be different from the real price and duration. <ref name="pmstudy"> https://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/ </ref> | Top-down estimating, also refered to as analogous estimating, defines the way of estimating based on the information which is available about the project at the moment. The tool often uses similar projects as guide lines in regards to tasks, cost and project durations. The top-down approach is a fast and efficient way of estimating, but can leave out information, which is unique to the particular project, and the result can therefore be different from the real price and duration. <ref name="pmstudy"> https://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/ </ref> | ||
| − | ==== Bottom-up | + | ==== Bottom-up estimating ==== |
== Application - ''provide guidance on how to use the tool, concept or theory and when it is applicable''== | == Application - ''provide guidance on how to use the tool, concept or theory and when it is applicable''== | ||
| − | ==== Top-down | + | |
| + | |||
| + | ==== Top-down estimating ==== | ||
The top-down estimating strategy can be put into work when | The top-down estimating strategy can be put into work when | ||
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| − | ==== Bottom-up | + | ==== Bottom-up estimating ==== |
== Limitations - ''critically reflect on the tool/concept/theory and its application context. What can it do, what can it not do? Under what circumstances should it be used, and when not? How does it compare to the “status quo” of the standards – is it part of it, or does it extent them? Discuss your article in the context of key readings / resources provided in class. Substantiate your claims with literature'' == | == Limitations - ''critically reflect on the tool/concept/theory and its application context. What can it do, what can it not do? Under what circumstances should it be used, and when not? How does it compare to the “status quo” of the standards – is it part of it, or does it extent them? Discuss your article in the context of key readings / resources provided in class. Substantiate your claims with literature'' == | ||
| + | |||
| + | The two different estimation techniques each have their limitations, when being used for cost- and duration estimations. These will be listed below: | ||
| + | |||
| + | ==== Top-down estimating ==== | ||
| + | |||
| + | * The use of the top-down estimation gives a rough and not quite accurate picture of the project. | ||
| + | * When comparing the current project to an earlier finished reference project, the assumptions regarding similarities between them has to be correct. If the assumptions were wrong, the determined estimate would then be useless for the project. | ||
| + | * The potential inaccuracy in regards to the results, makes it harder to make decisions and project planning based on the estimates found from using the top-down approach. | ||
| + | |||
| + | |||
| + | |||
| + | ==== Bottom-up estimating ==== | ||
== Annotated Bibliography == | == Annotated Bibliography == | ||
| + | |||
''Provide key references (3-10), where a reader can find additional information on the subject. The article MUST make appropriate references to the and reference material provided in class – either incorporating it as a source, or critically discussing aspects that are missing from it but covered by this article. Summarize and outline the relevance of each reference to the topic (around 100 words per reference). The bibliography is not counted in the suggested 3000 word target length of the article.'' | ''Provide key references (3-10), where a reader can find additional information on the subject. The article MUST make appropriate references to the and reference material provided in class – either incorporating it as a source, or critically discussing aspects that are missing from it but covered by this article. Summarize and outline the relevance of each reference to the topic (around 100 words per reference). The bibliography is not counted in the suggested 3000 word target length of the article.'' | ||
== References == | == References == | ||
<references /> | <references /> | ||
Revision as of 15:05, 19 February 2021
Abstract
When starting a new project, an important task for the project manager, is the estimation process. This can both be an estimation regarding cost and time-frames. It is important to get the project off to a good start, given that success of the project depends on the estimation - both in regards to time and cost. When estimating (or in other words 'predicting the future'), the project manager can use the following methods:
- Top-down estimating
- Bottom-up estimating
By choosing the top-down approach, the project manager chooses to make an overall scope of the project. From here, the major elements of the project is being listed and estimated separately. This approach creates a rough idea of the project size and the different timeframes of the project elements. The advantages of using the top-down approach is less time consuming and requires a limited amount effort. The estimates created by this method often turns out larger than the ones, which has been found using the bottom-up approach. [1]
The bottom-up approach is on the other hand a very time-consuming and costly method, but it gives a more accurate estimate of the project time and cost. By using the bottom-up approach, the cost and time frame is being calculated for every activity related to the project. The values and time frames are then aggregated in order to estimate the total cost and project time. [2] The bottom-up approach is often used in order to gain stakeholders to buy in on the project.
Big idea - describe the tool, concept or theory and explain its purpose. The section should reflect the current state of the art on the topic
The term 'estimating' in terms of project management can be defined as "the process of predicting the cost and time needed to deliver project products". [3] The estimation part is an important step on the way to a get a good product, which satisfies the costumer and/or the user, when it is delivered in the end. The estimation proces is used in order to predict the cost and the duration of a given project, which is making it possible to make the decisions, which will benefit the project. When estimating, it is also possible to make a decision regarding the viability of the project, when the financial requirements has been determined.
The duration of a project is important to know in regards to costumer expectations and in order to know when the product can be delivered. From the estimation process, the project manager can use the determined time frames for time scheduling, which is relevant informations for interested stakeholders. During the project, the project manager can hold the real time data up against the estimated values in order to monitor the performance of the project. [3]
Project estimations can be a fast task, but it can also be very time consuming. This all comes down to how the project manager wishes to prioritize the estimation, and is a decision on whether the time used on estimating is worth the effort in the end. The estimation process can be carried out by using top-down estimating as well as the bottom-up estimating.
Top-down estimating
Top-down estimating, also refered to as analogous estimating, defines the way of estimating based on the information which is available about the project at the moment. The tool often uses similar projects as guide lines in regards to tasks, cost and project durations. The top-down approach is a fast and efficient way of estimating, but can leave out information, which is unique to the particular project, and the result can therefore be different from the real price and duration. [4]
Bottom-up estimating
Application - provide guidance on how to use the tool, concept or theory and when it is applicable
Top-down estimating
The top-down estimating strategy can be put into work when
- the project has a limited amount of information available
- the project manager wants a fast estimation of the project cost and duration
- an accurate estimate is not needed
Bottom-up estimating
Limitations - critically reflect on the tool/concept/theory and its application context. What can it do, what can it not do? Under what circumstances should it be used, and when not? How does it compare to the “status quo” of the standards – is it part of it, or does it extent them? Discuss your article in the context of key readings / resources provided in class. Substantiate your claims with literature
The two different estimation techniques each have their limitations, when being used for cost- and duration estimations. These will be listed below:
Top-down estimating
- The use of the top-down estimation gives a rough and not quite accurate picture of the project.
- When comparing the current project to an earlier finished reference project, the assumptions regarding similarities between them has to be correct. If the assumptions were wrong, the determined estimate would then be useless for the project.
- The potential inaccuracy in regards to the results, makes it harder to make decisions and project planning based on the estimates found from using the top-down approach.
Bottom-up estimating
Annotated Bibliography
Provide key references (3-10), where a reader can find additional information on the subject. The article MUST make appropriate references to the and reference material provided in class – either incorporating it as a source, or critically discussing aspects that are missing from it but covered by this article. Summarize and outline the relevance of each reference to the topic (around 100 words per reference). The bibliography is not counted in the suggested 3000 word target length of the article.
References
- ↑ https://www.apm.org.uk/blog/three-ways-to-approach-cost-estimation/
- ↑ Project Management: A guide to the Project Management Body of Knowledge (PMBOK guide), 6th Edition (2017)
- ↑ 3.0 3.1 https://study.com/academy/lesson/top-down-bottom-up-estimating-techniques-in-project-management.html
- ↑ https://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/
