Introduction to project management/IPM103/Budget/Methods

Estimating costs

This section covers the various ways to estimate costs for a project.

• Analogous Estimate - an estimate that is based on other project estimates
• Parametric Estimate - using average costs per unit, based on costs from other projects
• Bottom-Up Estimate - identifying the cost of each item in each activity of the project
• Activity-Based Estimate - reorganising estimates from multiple vendors so that those costs associated with a particular activity are grouped by adding the activity code to the detailed estimate.

Reading

1. Read the the section Estimating Costs to Compare and Select Projects in the prescribed textbook (Web | PDF), Chapter 12 (page 108 to the top of 112 in the PDF version).
2. WEnote: Select a method outlined in the chapter and share at least one strength and one weakness of the approach. e.g. "A key strength of Bottom-up estimating is ...", "A weakness of Parametric estimating is ..."
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