Type of

estimates
TOP DOWN ESTIMATE
Use prior experience and information to
determine the estimated duration and cost

Methods
Consensus method
Ratio or parametric method
Apportion method
Function point method
Learning curve
Consensus method
uses the pooled experience of senior
and/or middle managers to estimate the
total project duration and cost
In conceptual stage of the project
Ratio or parametric
method

Calculating our estimates based on the

industry bench mark
To get initial duration and cost
2500 sqft RM 250 000
1500 sqft Cost ????
ratio

Cost = RM 150 000

 parametri
c

Cost = 1500 sqft * RM100

Cost = RM 150 000

Similar construction method
Similar interior design
Similar construction materials
Apportion method
Extension of ratio method
Cost estimated based on WBS
 Total
Project RM 150 000
Cost

Interior Exterior Lawn

20% 40% 40%
RM 30 000 RM 60 000 RM 60 000

Piping Roofing Grass

10% 20% 20%

Electrical Painting Garage

10% 20% 20%
Function point method
For software development project
Function point = weighted variables
Variables = inputs, outputs, inquiries, data files,
and interfaces
 Complexi
Elements Count Sub-total
ty
Inputs 3 3 9
Outputs 4 7 28
Inquiries 2 4 8
Files 5 7 35
Interfaces 3 5 15
Total 95
1 function point in C++ 8 hours

Then our project will take 8*95 =

760 hours
Learning curve
The more times a task has been performed, the
less time will be required on each subsequent
iteration
To predict time reduction to perform a task
time

Number of
units
A B C produced
Type of
estimates
BOTTOM UP ESTIMATE
Methods
Template method
Parametric procedure applied to specific task
Template method
use of similar previous projects as a good
starting point. E.g. A collision shops
consults published labor rates and labor
time to perform a collision repair. This
method enables the performing
organization to develop a potential
schedule, estimate costs, and develop a
budget in very short order.
Parametric procedure
applied to specific task
Specific
Based on WBS
 Ceiling

Wall painting Wallpaper

Flooring

Wallpaper RM 5 per sqft

nstallation RM 2 per sqftTotal
cost =
Area of the wall *
(Wallpaper + Installatio
Types of Costs
Direct Costs
- Cost that are clearly chargeable to a specific work
package
Labor, materials , equipment and others

Direct Project Overhead Costs

- costs that are directly tied to a specific project
deliverable or work package.
Salary ,rents , supplies , specialized machinery

General and Administrative Overhead Costs

-Organization costs indirectly to a specific package that
are apportioned to the project.
 Example : Contract Bid
Summary Costs
Direct Costs $ 80,000

Direct Overhead $ 20,000

Total direct Costs $ 100,000

G&A overhead (20%) $ 20,000

Total Costs $ 120,000

Profit (20%) $ 24,000

Total bid $ 144,000

Estimating Projects:
Preferred Approach
Make rough top-down estimates
Develop the WBS with an OBS
Use bottom-up estimates
Develop schedule and budget
Reconcile the difference between the top-down
and bottom up estimates
Refining Estimates
-Reasons for Adjusting Estimates
Interaction costs are hidden in estimates
Normal condition do not apply
Things go wrongs on projects
Changes in scope and plans

-Adjusting Estimates
Time and cost estimates the specific activities
are adjusted as the risks, resources and situation
particulars become more clearly defined.
Refining Estimates
The reality is that not all needed information is available
when estimating is being done and it is impossible to
predict the future. Thats why we estimate.
Even with the best estimating efforts, it may be
necessary to revise estimates based on new relevant
information before creating a baseline schedule and
budget.
Estimates are adjusted once risks, resources, and other
facts have been clearly defined and understood.
Remember the WBS is only a starting point and does not
reveal all the hidden activities that typically occur during
a project.