Bottom-up estimating is a management technique for determining the overall cost or timeline for a project by examining the work at the most granular level of detail, compiling all this information, and then coming up with an overall budget and timeline for a project that can be delegated to team members.
Triangular distribution is a common formula used when there is insufficient historical data to estimate duration of an activity. It is based on three points that consider estimation uncertainty and risk. Most likely (M): estimate based on the duration of the activity given all the other considerations.
Differences between analogous and parametric estimating:Analogous is considered top-down and is less accurate than parametric. Parametric is more accurate, specifically when the underlying data is scalable.
Three point estimating is a technique which utilizes an optimistic and pessimistic estimate to determine the ideal estimate value for a project task. It is a shoe-in for PMP exam questions, which is not likely to change anytime soon. It allows known risks to be quantified and built in to the project budget.
If the question relates to no experience, or not much reliable historical data, then it is best to use Triangular distribution. If the question suggests that there are experts, there is historical data from previous similar projects and more accuracy if desired then Beta method is the method of choice.
Is the combination of two triangles, each with an area of 0.5. The mode is also the median. if the DT is used for estimating project cost in an engineering context, it is also possible to assign a probability of cost "overrun". So, the mode is the median.
Use All Three Parts of Project Estimation
- Part 1: Create an Initial Estimate.
- Part 2: Track EQF to Understand the Project Estimate.
- Part 3: Use EQF to Manage Project Concerns.
- Previous columns by Johanna Rothman:
Question: Which is not a point used for three-point estimation in PERT? Optimistic estimate Most likely estimate Budget estimate Pessimistic estimate.
The lesson begins with a discussion of the six points: perspective, organization, identification, number, technique and supporting events. Each of the six points is covered in detail and examples of each are discussed.
There are three estimation times involved in PERT; Optimistic Time Estimate (TOPT), Most Likely Time Estimate (TLIKELY), and Pessimistic Time Estimate (TPESS). In PERT, these three estimate times are derived for each activity.
The analogous estimating technique uses information from similar projects to establish a cost estimate based on the data available. Analogous estimating needs to include expert judgement in order to establish reusability of the data. Analogous estimating is used where there is limited information about the project.
PERT is an estimating technique that uses a weighted average of three numbers (see below) to come up with a final estimate. The most pessimistic (P) case when everything goes wrong. The most optimistic (O) case where everything goes right. The most likely (M) case given normal problems and opportunities.
Top Down estimating is a project estimating technique whereby the overall project is estimated first, and individual tasks are apportioned from it. You start from the top of the pyramid and work downwards.
The beta distribution is a weighted average in which more weight is given to the most likely estimate. This alteration to the formula and placing more weight on the most likely estimate is made to increase the accuracy of the estimate by making it follow the Normal Distribution shape.
However, the Beta Distribution is preferred in cases where we have a lot of historical data, and is more useful for similar type of projects, and experts are providing this based on historical evidence & experience . Thus, a Triangular Distribution is more suited for judgemental data estimates.
The PERT estimate (E) is based on a formula that includes your optimistic time estimate (O), your most likely time estimate (M) and your pessimistic time estimate (P). The basic equation is this: E = (O + 4M +P) / 6 .
You can use various methods to estimate activity duration, depending on the nature of the activities.
- PERT Method.
- Analogous Estimation.
- Parametric Estimation.
- Expert Judgment.
- The Delphi Technique.
- Work Breakdown Structure.
An average expected estimate is calculated by taking a weighted average of these 3 points of estimates using below formula:E (Mean PERT Average) = (O+4ML+P)/6 (by giving more weightage to most likely estimate)Standard Deviation (SD) = (P-O)/6Actual time taken to travel will be anything within this range with the most
Estimation Tools and Techniques
| Tool / Technique Name | Count it has been Used across 3 Processes | Name of the process used in |
|---|
| Reserve Analysis | 2 | Estimate Activity Duration Estimate Costs |
| Three-point Estimates | 2 | Estimate Activity Duration Estimate Costs |
| Vendor Bid Analysis | 1 | Estimate Costs |
Activity-based management (ABM) is a management strategy in which business processes are evaluated and adjusted for their cost efficiency using activity-based costing. All costs associated with a business process are first assessed in AMB.
Advertisements. A Function Point (FP) is a unit of measurement to express the amount of business functionality, an information system (as a product) provides to a user. FPs measure software size. They are widely accepted as an industry standard for functional sizing.
