Estimating Work Duration

1. Determine the availability of the resources
2. Show the availability as a percentage of the effort required to achieve the work package
3. Duration = (Effort/Productivity)/Availability

▫        If effort is in # of hours, the duration will be in # of hours

▫        To have duration in days, divide the value calculated above by the number of working hours per day

4. Cost = Duration* Unit cost

▫        Cost = (Effort/Productivity ) * Unit cost

▫        Determine duration as per number 3 above

▫        Unit  cost : e.g. $40/hour

Determining Durations of Work packages

•        PERT of each work package:

              

•        PERT of the entire project is the sum of the PERTs of all the activities on the critical path

•        Standard Deviation of a work package:

              

PERT, Sigma and probabilities

•        50% probability that a task’s duration equals its PERT

•        68% probability that a task’s duration is between ( PERT + 1 * Sigma) and (PERT – 1 * sigma)

•        95% probability that a task’s duration is between ( PERT + 2 * Sigma) and (PERT – 2 * sigma)

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Top-Down and Bottom-Up Estimates

•Level of detail is different for
different levels of management.

•Level of detail in the WBS varies
with the complexity of the project.

•Excessive detail is costly.

–Fosters a focus on departmental outcomes

–Creates unproductive paperwork

•Insufficient detail is costly.

–Lack of focus on goals

–Wasted effort on nonessential activities

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Bottom-Up Approaches for Estimating Project Times and Costs

•Template methods

•Parametric procedures applied to specific tasks

•Range estimates for
the WBS work packages

•Phase estimating: A hybrid

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Top-Down Approaches for Estimating Project Times and Costs

•Consensus methods

•Ratio methods

•Apportion method

•Function point methods for software and system projects

•Learning curves

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Top-Down versus Bottom-Up Estimating

•Top-Down Estimates

–Are usually are derived from someone who uses experience and/or information to determine the project duration and total cost.

–Are made by top managers who have little knowledge of the processes used to complete the project.

•Bottom-Up Approach

–Can serve as a check on cost elements in the WBS
by rolling up the work packages and associated cost accounts to major deliverables at the work package level.

Estimating Projects: Preferred Approach

•Make rough top-down estimates.

•Develop the WBS/OBS.

•Make bottom-up estimates.

•Develop schedules and budgets.

•Reconcile differences between top-down
and bottom-up estimates

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Estimating Projects

Estimating Projects 

•Estimating

–The process of forecasting or approximating the time and cost of completing project deliverables.

–The task of balancing expectations of stakeholders and need for control while the project is implemented.

•Types of Estimates

–Top-down (macro) estimates: analogy, group consensus, or mathematical relationships

–Bottom-up (micro) estimates: estimates of elements
of the work breakdown structure

Importance of Estimating Time and Cost-

•To support good decisions.

•To schedule work.

•To determine how long the project should take and its cost.

•To determine whether the project is worth doing.

•To develop cash flow needs.

•To determine how well the project is progressing.

•To develop time-phased budgets and establish the project baseline.

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