mp (lect 05) -- dr. imam baihaqi

7/26/2019 MP (Lect 05) -- Dr. Imam Baihaqi

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Estimating ProjectTimes and Costs

CHAPTER FIVE

Copyright 2011 by The McGraw-Hill Companies, Inc. llrights reser!e".

McGraw-Hill#Irwin


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Where We Are NowWhere We Are Now


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Estimating ProjectsEstimating Projects

EstimatingThe process of forecasting or approximating the time

and cost of completing project deliverables

The tas! of balancing expectations of sta!eholders

and need for control while the project is implemented T"pes of Estimates

Top#down $macro% estimates& analog"' gro(pconsens(s' or mathematical relationships

)ottom#(p $micro% estimates& estimates of elementsof the wor! brea!down str(ct(re


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Wh" Estimating Time and Cost Are *mportantWh" Estimating Time and Cost Are *mportant

EXHIBIT 5.1

To s(pport good decisions To sched(le wor!

To determine how long the project sho(ld ta!eand 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 b(dgets and establish theproject baseline


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+actors *nfl(encing the ,(alit" of Estimates+actors *nfl(encing the ,(alit" of Estimates

,(alit" ofEstimates

Project-(ration

People

Project .tr(ct(reand /rgani0ation

PaddingEstimates

/rgani0ationC(lt(re

/ther$Nonproject%

+actors

Planning 1ori0on


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Estimating 2(idelines for Times'Estimating 2(idelines for Times'

Costs' and 3eso(rcesCosts' and 3eso(rces

4 1ave people familiar with the tas!s ma!e the estimate

5 6se several people to ma!e estimates

7 )ase estimates on normal conditions' efficient methods'and a normal level of reso(rces

8 6se consistent time (nits in estimating tas! times

9 Treat each tas! as independent' don:t aggregate

; -on:t ma!e allowances for contingencies


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Top#-own vers(s )ottom#6p EstimatingTop#-own vers(s )ottom#6p Estimating

Top#-own EstimatesAre (s(all" are derived from someone who (ses

experience and=or information to determine the projectd(ration and total cost

Are made b" top managers who have little !nowledgeof the processes (sed to complete the project

)ottom#6p Approach

Can serve as a chec! on cost elements in the W).b" rolling (p the wor! pac!ages and associated costacco(nts to major deliverables at the wor! pac!agelevel


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Top#-own vers(s )ottom#6p EstimatingTop#-own vers(s )ottom#6p Estimating

TABLE 5.1

Conditions for Preferring Top-Down or Botto-!pTie "nd Cost Esti"tes

Condition #"$ro Esti"tes #i$ro Esti"tes

%tr"tegi$ de$ision "&ing X

Cost "nd tie iport"nt X

Hig' !n$ert"int( X

Intern")* s")) pro+e$t X

Fi,ed-pri$e $ontr"$t X

C!stoer w"nts det"i)s X

nst")e s$ope X


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Estimating Projects& Preferred ApproachEstimating Projects& Preferred Approach

>a!e ro(gh top#down estimates

-evelop the W).=/).

>a!e bottom#(p estimates -evelop sched(les and b(dgets

3econcile differences between top#down

and bottom#(p estimates


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Top#-own Approaches for EstimatingTop#-own Approaches for Estimating

Project Times and CostsProject Times and Costs

Consens(s methods

3atio methods

Apportion method

+(nction point methods forsoftware and s"stem projects

?earning c(rves

Pro+e$t Esti"te

Ties

Costs


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Apportion >ethod of Allocating Project CostsApportion >ethod of Allocating Project Costs6sing the Wor! )rea!down .tr(ct(re6sing the Wor! )rea!down .tr(ct(re

FI/RE 5.1


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.implified )asic +(nction Point Co(nt Process.implified )asic +(nction Point Co(nt Processfor a Prospective Project or -eliverablefor a Prospective Project or -eliverable

TABLE 5.0


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Example& +(nction Point Co(nt >ethodExample& +(nction Point Co(nt >ethod

TABLE 5.


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)ottom#6p Approaches for Estimating)ottom#6p Approaches for Estimating

Project Times and CostsProject Times and Costs

Template methods

Parametric proced(res

applied to specific tas!s

3ange estimates forthe W). wor! pac!ages

Phase estimating& A h"brid


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.(pport Cost Estimate Wor!sheet.(pport Cost Estimate Wor!sheet

FI/RE 5.0


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Phase Estimating over Prod(ct ?ife C"clePhase Estimating over Prod(ct ?ife C"cle

FI/RE 5.


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Top#-own and )ottom#6p EstimatesTop#-own and )ottom#6p Estimates

FI/RE 5.2


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?evel of -etail?evel of -etail

?evel of detail is different fordifferent levels of management

?evel of detail in the W). varieswith the complexit" of the project

Excessive detail is costl"

+osters a foc(s on departmental o(tcomes

Creates (nprod(ctive paperwor!

*ns(fficient detail is costl"?ac! of foc(s on goals

Wasted effort on nonessential activities


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T"pes of CostsT"pes of Costs

-irect CostsCosts that are clearl" chargeableto a specific wor! pac!age

Labor, materials, equipment, and other

-irect $Project% /verhead CostsCosts inc(rred that are directl" tied to an identifiable

project deliverable or wor! pac!ageSalary, rents, supplies, specialized machinery

2eneral and Administrative /verhead Costs/rgani0ation costs indirectl" lin!ed to a specific

pac!age that are apportioned to the project


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Contract )id .(mmar" CostsContract )id .(mmar" Costs

FI/RE 5.5

-irect costs @B'BBB

-irect overhead @5B'BBB

Total direct costs @4BB'BBB

2A overhead $5BD% @5B'BBBTotal costs @45B'BBB

Profit $5BD% @58'BBB

Total bid @488'BBB


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Three iews of CostThree iews of Cost

FI/RE 5.3


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3efining Estimates3efining Estimates

3easons for Adj(sting Estimates*nteraction costs are hidden in estimates

Normal conditions do not appl"

Things go wrong on projects

Changes in project scope and plans

Adj(sting Estimates

Time and cost estimates of specific activities are

adj(sted as the ris!s' reso(rces' and sit(ationpartic(lars become more clearl" defined


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Creating a -atabase for EstimatingCreating a -atabase for Estimating

FI/RE 5.4


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Fe" TermsFe" Terms

Apportionent et'ods

Botto-!p esti"tes

Contingen$( f!nds

De)p'i et'od

Dire$t $osts

F!n$tion points

Le"rning $!res

6er'e"d $osts

P"dding esti"tes

P'"se esti"ting

R"nge esti"ting

R"tio et'ods

Tep)"te et'od

Tie "nd $ost d"t""ses


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W). +ig(reW). +ig(re

TABLE 5.2


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?earning C(rves 6nit al(es?earning C(rves 6nit al(es

TABLE A5.1


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?earning C(rves C(m(lative al(es?earning C(rves C(m(lative al(es

TABLE A5.0

mp (lect 05) -- dr. imam baihaqi

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