Estimate Cost – Tools & Techniques

1. Expert Judgment 1. Previous similar projects;

2. Analogous Estimating
3. Parametric Estimating 2. Information in the industry, discipline, and application
4. Bottom-Up
Estimating area; and
5. Three-Point
Estimating 3. Cost estimating methods.
6. Data Analysis
1. Alternative
Analysis
2. Reserve
Analysis
3. Cost of Quality
1. Project Management
Information's System
2. Decision Making
1. Voting

PMBOK : P.243
 Estimate Cost – Tools & Techniques

1. Expert Judgment
2. Analogous
Analogous cost estimating uses values, or attributes, of
Estimating a previous project that are similar to the current project.
3. Parametric Estimating
4. Bottom-Up Values and attributes of the projects may include but are
Estimating
5. Three-Point
not limited to: scope, cost, budget, duration, and
Estimating measures of scale (e.g., size, weight). Comparison of
6. Data Analysis
1. Alternative these project values, or attributes, becomes the basis for
Analysis
2. Reserve estimating the same parameter or measurement for the
Analysis
3. Cost of Quality
current project.
1. Project Management
Information's System
2. Decision Making
1. Voting

PMBOK : P.244
 Estimate Cost – Tools & Techniques

1. Expert Judgment
2. Analogous Estimating
Parametric estimating uses a statistical relationship
3. Parametric between relevant historical data and other variables (e.g.,
Estimating
4. Bottom-Up square footage in construction) to calculate a cost
Estimating
5. Three-Point
estimate for project work. This technique can produce
Estimating
6. Data Analysis
higher levels of accuracy depending on the sophistication
1. Alternative and underlying data built into the model. Parametric cost
Analysis
2. Reserve estimates can be applied to a total project or to segments
Analysis
3. Cost of Quality
of a project, in conjunction with other estimating
4. Project Management
Information's System
methods.
5. Decision Making
1. Voting

PMBOK : P.244
 Estimate Cost – Tools & Techniques

1. Expert Judgment
2. Analogous Estimating Bottom-up estimating is a method of estimating a
3. Parametric Estimating component of work. The cost of individual work
4. Bottom-Up
Estimating packages or activities is estimated to the greatest level of
5. Three-Point
Estimating
specified detail. The detailed cost is then summarized or
6. Data Analysis “rolled up” to higher levels for subsequent reporting and
1. Alternative
Analysis tracking purposes. The cost and accuracy of bottom-up
2. Reserve
Analysis cost estimating are typically influenced by the size or
3. Cost of Quality
1. Project Management
other attributes of the individual
Information's System activity or work package.
2. Decision Making
1. Voting

PMBOK : P.244
 Estimate Cost – Tools & Techniques

1. Expert Judgment The accuracy of single-point cost estimates may be improved by

2. Analogous Estimating
3. Parametric Estimating considering estimation uncertainty and risk and using three
4. Bottom-Up estimates to define an approximate range for an activity’s cost:
Estimating
5. Three-Point 1. Most likely (cM). The cost of the activity, based on realistic
Estimating effort assessment for the required work and any predicted
6. Data Analysis
1. Alternative
expenses.
Analysis 2. Optimistic (cO). The cost based on analysis of the best-case
2. Reserve
Analysis
scenario for the activity.
3. Cost of Quality 3. Pessimistic (cP). The cost based on analysis of the worst-case
1. Project Management
Information's System
scenario for the activity.
2. Decision Making
1. Voting
Triangular distribution. cE = (cO + cM + cP) / 3
Beta distribution. cE = (cO + 4cM + cP) / 6
PMBOK : P.244
 Estimate Cost – Tools & Techniques

1. Expert Judgment 1. Alternatives analysis. Alternatives analysis is a technique used to evaluate

2. Analogous Estimating
identified options in order to select which options or approaches to use to
3. Parametric Estimating
4. Bottom-Up execute and perform the work of the project. An example would be
Estimating evaluating the cost, schedule, resource, and quality impacts of buying
5. Three-Point versus making a deliverable.
Estimating
2. Reserve analysis. Cost estimates may include contingency reserves
6. Data Analysis
1. Alternative (sometimes called contingency allowances) to account for cost uncertainty.
Analysis Contingency reserves are the budget within the cost baseline that is
2. Reserve allocated for identified risks. Contingency reserves are often viewed as the
Analysis
part of the budget intended to address the known-unknowns that can affect
3. Cost of Quality
1. Project Management a project.
Information's System 3. Cost of quality. Assumptions about costs of quality may be used to prepare
2. Decision Making the estimates. This includes evaluating the cost impact of additional
1. Voting
investment in conformance versus the cost of nonconformance. It can also
include looking at short-term cost reductions versus the implication of more
frequent problems later on in the product life cycle.
PMBOK : P.245
 Estimate Cost – Tools & Techniques

1. Expert Judgment
2. Analogous Estimating
The project management information system can include
3.
4.
Parametric Estimating
Bottom-Up
spreadsheets, simulation software, and statistical analysis
Estimating tools to assist with cost estimating. Such tools simplify
5. Three-Point
Estimating the use of some cost-estimating techniques and thereby
6. Data Analysis
1. Alternative
facilitate rapid consideration of cost estimate
Analysis
2. Reserve
alternatives.
Analysis
3. Cost of Quality
1. Project Management
Information's System
2. Decision Making
1. Voting

PMBOK : P.244
 Estimate Cost – Tools & Techniques

1. Expert Judgment
2. Analogous Estimating
The decision-making techniques that can be used in the
3.
4.
Parametric Estimating
Bottom-Up
Estimate Costs process include but are not limited to
Estimating voting. Voting is an assessment process having multiple
5. Three-Point
Estimating alternatives with an expected outcome in the form of
6. Data Analysis
1. Alternative
future actions. These techniques are useful for engaging
Analysis
2. Reserve
team members to improve estimate accuracy and
Analysis commitment to the emerging estimates.
3. Cost of Quality
1. Project Management
Information's System
2. Decision Making
1. Voting

PMBOK : P.246