Project estimate involves cost estimation strategies and their correct usage. The project estimation sometimes gets hard when there is not much information available regarding the job. If your project is not estimated well, it can lead to an increase in project costs, project timeline and can frustrate you, your clients and your team. This article will cover the top 5 project estimation techniques that can help you with your entire project.
1. Top-Down Estimation
In this technique, the project budget is firstly set by the project manager and then it is divided between the individual tasks. A top-down estimate works well for complex projects because a project manager can make the changes as per need.
1. It can help project managers to estimate the cost and profit easily according to project requirements.
2. It will help the client know whether his offered amount will be sufficient or not.
3. It is quite helpful for small businesses having fewer resources.
1. It can be faulty sometimes because it is based on guesses.
2. The major changes in the cost of the individual task is hard to be amended.
2. Bottom-Up Estimation
The bottom-up estimating technique is the same as top-down estimation but it includes minor details of the project as well. The results are more accurate in this technique. Each part of the project is estimated separately;y and then is aggregated to the total estimate of the entire project at hand.
1. It gives accurate estimation.
2. It is very detailed in nature, so you can check the minor details even after the completion of the project.
1. It requires a lot of time for completion.
2. A lot of information is required to estimate the project using this technique.
3. Parametric Estimation
This project estimation technique bases itself on the previous project to estimate for a new project. It works on the statistical method of multiplying the cost, time and members for a new project. For example, if you spent 100$ on a project in 1 hour, then a 5-hour task will cost 500$.
1. It has higher accuracy than other project estimation techniques.
2. It doesn’t require a lot of information.
1. The effort cannot be multiplied to get an accurate estimation. For example, an easy task costs $500 for 1 day, but a difficult task cannot be done for $1000 in 2 days.
4. Analogous Estimation
The analogous estimating technique takes the exact same cost and duration of the previous project for the new one. If a project manager has done a project in past, then he can use the same data for a new project without any changes.
1. It is a quick and simple technique because it is based on repeatable tasks.
2. The level of effort for this technique is lesser than other techniques.
1. Two projects can never be exactly the same (project duration can be increased), so, the accuracy of estimates can be shaky.
2. It gives you a rough estimate for the new project.
5. Three-Point Estimation
The three-point estimating technique is based entirely on probability. This estimation is based on the average of three circumstances – best, normal and worst. The formula works like this:
a + b + c / 3
For a freelancer, a blog costs 2000$ in the best scenario, 1000$ in the worst scenario and 1500$ in the normal scenario, the estimation will be:
1000 + 1500 + 2000 = 4500
4500 / 3 = 1500$
1. It gives maximum accuracy.
2. It gives realistic estimates.
1. It is a complicated technique for complex projects.
What are the 3 different ways to estimate the project?
The three different project estimation processes are:
1. The project budget is finalized first and then it is divided into individual stages and tasks of the entire project.
2. The cost of the previous similar project is taken for the current project.
3. The average of best, worst and normal scenarios is taken for an accurate estimate.