Intro to Project Management: Project Schedule Management Estimating Techniques Analogous Parametric ThreePoint PERT BottomUp

Estimating Techniques

What This Is

Estimating techniques help project managers predict the time, cost, and resources required for project activities. Accurate estimates ensure that projects are completed on time, within budget, and meet stakeholder expectations. For example, when building a new highway, project managers use estimating techniques to determine the time and resources required for excavation, construction, and testing.

Key Terms & Formulas

• Analogous Estimating: Estimating the duration of a project activity by comparing it to a similar activity from a previous project.
• Parametric Estimating: Estimating the duration of a project activity based on historical data and mathematical models.
• Three-Point Estimating (PERT): Estimating the duration of a project activity by combining optimistic, most likely, and pessimistic estimates.
• Bottom-Up Estimating: Estimating the duration of a project activity by breaking it down into smaller tasks and estimating each task individually.
• Triangular Distribution: A probability distribution used in PERT to estimate the duration of a project activity.
• Expected Value (EV): The average value of a project activity's duration, calculated using the triangular distribution.
• Standard Deviation (SD): A measure of the uncertainty associated with a project activity's duration.
• Coefficient of Variation (CV): A measure of the uncertainty associated with a project activity's duration, relative to its expected value.
• Earned Value (EV) = % complete × BAC (Earned Value = percent complete times Budget at Completion)
• Cost Performance Index (CPI) = EV / AC (Cost Performance Index = Earned Value / Actual Cost)
• Schedule Performance Index (SPI) = EV / PV (Schedule Performance Index = Earned Value / Planned Value)

Step-by-Step / Process Flow

1. Identify the project activity: Determine the specific activity for which you need to estimate the duration.
2. Gather historical data: Collect data on similar activities from previous projects to use for analogous estimating.
3. Develop a mathematical model: Create a mathematical model to use for parametric estimating, such as a linear or exponential function.
4. Estimate the activity duration: Use the chosen estimating technique to estimate the duration of the project activity.
5. Refine the estimate: Refine the estimate by considering factors such as resource availability, dependencies, and risks.

Common Mistakes

• Mistake: Assuming that analogous estimating is always accurate.
• Correction: Analogous estimating is only as good as the similarity between the previous project and the current project. Consider other estimating techniques to validate the estimate.
• Mistake: Failing to consider the uncertainty associated with a project activity's duration.
• Correction: Use the triangular distribution and expected value to estimate the duration of a project activity, and consider the standard deviation and coefficient of variation to quantify the uncertainty.
• Mistake: Not considering the impact of dependencies on project activity duration.
• Correction: Consider the dependencies between project activities and estimate the duration of each activity accordingly.

Exam Tips

• Tip: Be prepared to explain the differences between analogous, parametric, and bottom-up estimating techniques.
• Tip: Understand how to calculate the expected value, standard deviation, and coefficient of variation for a project activity's duration.
• Tip: Be aware of the distinction between earned value, actual cost, and planned value.

Quick Practice Questions

1. If the CPI is 0.8, is the project under or over budget? Answer: Under budget. Explanation: A CPI of 0.8 indicates that the project is earning value at a rate of 80% of the planned value, which means it is under budget.
2. If the EV is $100,000 and the BAC is $200,000, what is the percent complete? Answer: 50%. Explanation: The percent complete is calculated by dividing the earned value by the budget at completion.
3. If the SD is 10 days and the EV is 20 days, what is the CV? Answer: 0.5. Explanation: The coefficient of variation is calculated by dividing the standard deviation by the expected value.

Last-Minute Cram Sheet

• Analogous estimating uses historical data from similar projects to estimate activity duration.
• Parametric estimating uses mathematical models to estimate activity duration.
• Bottom-up estimating breaks down activities into smaller tasks and estimates each task individually.
• Triangular distribution is used in PERT to estimate activity duration.
• Expected value is the average value of a project activity's duration.
• Standard deviation measures the uncertainty associated with a project activity's duration.
• Coefficient of variation measures the uncertainty associated with a project activity's duration, relative to its expected value.
• Earned value is calculated by multiplying the percent complete by the budget at completion.
• Cost performance index is calculated by dividing the earned value by the actual cost.
• Schedule performance index is calculated by dividing the earned value by the planned value.
• ⚠️ Decomposition breaks down work, not activities – it creates the WBS, not the activity list.
• ⚠️ Parametric estimating assumes that the relationship between variables is linear or exponential.
• ⚠️ Bottom-up estimating is only as good as the accuracy of the individual task estimates.