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Project Management

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Project Management
2/1/2013

12MCOM03: Project Management
SESSION – 6 & 7 j , y Project: Time, Cost & Quality

Estimating Projects
• Estimating
– The process of forecasting or approximating the time and cost of completing project deliverables. – The task of balancing the expectations of stakeholders and the 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

Why Estimating Time and Cost Are Important
• Estimates are needed to support good decisions. • Estimates are needed to schedule work. • Estimates are needed to determine how long the project should take and its cost. • Estimates are needed to determine whether the project is worth doing. • Estimates are needed to develop cash flow needs. • Estimates are needed to determine how well the project is progressing. • Estimates are needed to develop time-phased budgets and establish the project baseline.

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2/1/2013

Factors Influencing the Quality of Estimates
Planning Horizon
Other (Nonproject) Factors Project Duration

Organization Culture

Quality of Estimates

People

Padding Estimates

Project Structure and Organization

Estimating Guidelines for Times, Costs, and Resources
1. Have people familiar with the tasks make the estimate. 2. Use several people to make estimates. 3. Base estimates on normal conditions, efficient methods, and a normal level of resources. 4. Use consistent time units in estimating task times. 5. Treat each task as independent, don’t aggregate. 6. Don’t make allowances for contingencies. 7. Adding a risk assessment helps avoid surprises to stakeholders.

Macro versus Micro Estimating
Conditions for Preferring Top-Down or Bottom-up Time and Cost Estimates
Condition Strategic decision making Cost and time important High uncertainty Internal, small project Fixed-price contract
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