Definition: Estimation

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  • Created by: Annagc
  • Created on: 25-03-24 12:49
What is an estimate?
'a forecast of the probable time or cost of completing work'
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What do estimates allow you to do?
Economic analysis for investment appraisals to support judgements on value for money, create resource schedules, set budget, provides a starting point for analysing risk
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Estimating problems: Optimism/pessimism
Human or psychological factors introduce bias
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Estimating problems: Social/political pressure
Pressure from management, peers, the client may influence the estimator into providing an estimate acceptable to them, this will have negative consequences for the project team later
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Estimating problems: Experience
Lack of technical expertise/knowledge of estimating as a skill. Training and practice should help to build this skill
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Estimating problems: Unclear scope
Unlikely to get a good estimate if the estimator does not understand the project requirements
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Estimating problems: Inaccurate source data
For comparative and parametric estimating, the estimate will only be accurate if you validate inflationary factors or incorrect assumptions
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What is estimating?
'The use of a range of tools and techniques to produce forecasts of the probably time or cost of completing work.'
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What is comparative (analogous) estimating?
Assumes that the organisation has data (time and cost) from previous projects, which you can use to produce a credible indicator for subsequent projects
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Strength of comparative (analogous) estimating?
Quick to produce and reliable when a number of similar projects have been undertaken previously
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Weakness of comparative (analogous) estimating?
Relies on expert judgement and/or accurate source data. Comparisons may be invalid where there are varying circumstances
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What is parametric estimating?
Requires reliable historical data to produce reliable estimates typical attributes are lines of software code, cost/time per square metre etc.
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Strength of parametric estimating?
Widely respected within certain industries, provides timely estimate with limited knowledge as long as source data available, can be very accurate when you collect the basis of the data over time
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Weakness of parametric estimating?
Need to keep industry norms (heuristics) up to date for factors such as inflation. Requires significant amount of historical data in order to define adequate norms
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What is bottom-up (analytical) estimating?
Detailed estimate is produced for each work package and then rolled up throughout the Work Breakdown Structure
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Strength of bottom-up (analytical) estimating?
Enables input from subject matter experts for each domain area
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Weakness of bottom-up (analytical) estimating?
Takes time and you might double-count contingency throughout the WBS levels
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What is Delphi estimating?
A group of experts exchange view, and each independently gives estimates and assumptions to a facilitator who reviews the data and issues a summary report.
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Strength of Delphi estimating?
Versatile, can use it in a wide range of environments. Protects anonymity so participants are better protected from criticism of their proposed solution and avoids 'groupthink'
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Weakness of Delphi estimating?
It is an iterative process so some participants drop out before all rounds are complete, anonymity also means that there is less opportunity for group discussion and sharing of expertise
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Other cards in this set

Card 2

Front

What do estimates allow you to do?

Back

Economic analysis for investment appraisals to support judgements on value for money, create resource schedules, set budget, provides a starting point for analysing risk

Card 3

Front

Estimating problems: Optimism/pessimism

Back

Preview of the front of card 3

Card 4

Front

Estimating problems: Social/political pressure

Back

Preview of the front of card 4

Card 5

Front

Estimating problems: Experience

Back

Preview of the front of card 5
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