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Flashcards in Cost Management Deck (10)
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Estimating guidelines

Responsibility - Have people familiar with the tasks make the estimate
Use several people to make estimates – e.g. Delphi; Avoid group think
Normal Conditions - assume normal level of resources
Time units - keep consistent
Ensure Task Independence - Treat each separately, don’t aggregate tasks
Contingencies - Don’t make allowances, keep these separate
Apply Risk Analysis – helps avoid surprises to stakeholders
Remove the politics – avoid having politics play a role
Learn from history – Learn from past similar projects when possible

1

Macro estimating techniques

Consensus methods
Ratio methods
Apportion method
Function point methods for 
software and system projects
Learning curve (Historical, Template roll-up)
Pre-defined task selection tool

2

Macro consensus method

Uses the collective knowledge of top managers, middle managers and experts.
Done in conceptual stage
Often based on what the managers are willing to spend (not accurate)

3

Macro ratio method

Often used in construction. $:sq.foot

4

Macro apportion method (may want to draw a picture)

Given a budget it is allocated downwards throughout a flow chart into major project criteria, then into sub criteria using percentages.

6

Micro parametric method

Similar to ratio method, the parametric method calculates the cost based on some metric like square footage. The costs a based on the materials used.

7

Micro WBS rollup

Costs are calculated from the bottom up.

8

Micro phase estimating over product lifecycle

Continue estimating and re-estimating over the course of the project.

9

Cost types

Direct costs which are clearly chargeable to a specific work package
Indirect costs are those that cannot be associated with any particular work package or project activity

12

Micro estimating techniques

Parametric Procedures 
Applied to Specific Tasks
WBS Rollup
Phase Estimating: A Hybrid
Template method (best only if project is very similar to past project)