Project selection and estimating technique spencer o’briencpmgt303

1. Project Selection and Estimating TechniqueSpencer
O’BrienCPMGT/303: Project Estimating and Control
Techniques
August 17, 2020
Dr. Tony J. Taylor
Project Selection and Estimating Technique
As an action, Merriam-Webster.com defines estimating as “to
produce a statement of the approximate cost of” and, an item,
also defines an estimate as “a statement of the cost of work to
be done”. When incorporated into the project environment, the
action of estimating costs is seen as a process of developing an
approximation of the monetary resources need to complete
project activities (Project Management Institute, Inc., 2013).
With the above definitions in mind, the following report defines
two estimating methods, along with their potential for use
within the project setting. These estimating methods, known as
Top-Down Estimating and Bottom-Up Estimating, provide a
forecast of costs to separate aspects of the project.
2
Top-Down Estimating
Top-Down estimating is a project estimating method that
estimates the entire project initially, followed by separate tasks
within the project scope. Being not as specific as Bottom-Up
Estimating, the intent of Top-Down Estimating is to provide an
overall estimate for the assessment and analyzation of whether
the project will coincide within the budget allocated for the
project itself. In simpler terms, Top-Down Estimating is
performed before the project team has been developed, to
provide the authorizing stakeholders an evaluation tool in which
to determine if the project will proceed.
Bottom-Up Estimating

2. Bottom-Up Estimating is a method in which to determine an
estimated cost by starting with individual tasks, thereby ending
with the overall project cost last. Being detailed in nature, this
method is more commonly used throughout the various project
budget aspects. Bottom-Up Estimating is typically performed
later in the project phases than Top-Down, and in many cases
depends on the work breakdown structure in which to complete.
With the performance of this method being later in the project,
it allows a more specific input from those taking part in the
actual project itself.
Estimating Methods
The Project Management Institute offers us several
techniques in which to assist the above methods, as follows:
· Analogous Estimating – Utilizing data from organizational
assets in the way of lessons learned, Analogous Estimating
“uses the values such as scope, cost, budget, and duration or
measures of scale such as size, weight, and complexity from a
previous, similar project as the basis for estimating the same
parameter or measurement for a current project” (Project
Management Institute, Inc., 2013).
· Expert Judgement – As with the other various project
management groups, the use of expertise judgement can be
utilized, providing the project manager a more factual estimate.
Expert Judgment is just that, and individual (or group) that is
experienced in the field requiring an estimated cost, with their
experience not only in the assumed installation labor hours, but
of the material/associated costs, as well.
· Parametric Estimating – Utilizing data from organizational
assets as well, Parametric Estimating calculates project (or
activity) cost by using the statistical data offered by a project
(or activity) similar in scope and calculating based on the
parameters of the project being estimated. A common method of
Parametric Estimating is to obtain the square footage cost of a
typical (typical in this case meaning one of many) project and
using the cost as a multiplier or unit. This unit would be used to

3. calculate the new projects cost by determining the its total
square footage and multiplying it by the unit.
· Three-Point Estimating – Three-Point Estimating is a method
in which to determine three separate activity scenarios (Most
likely, Optimistic, Pessimistic) and calculating an average of
their sum, respectively. Before discussing the two separate
averaging calculations, it is first necessary to define the three
activity scenarios:
· Most Likely – If looking at the scenarios as a low, middle, and
high, Most Likely would be the middle. As it is titled, most
likely is the determination of an activity cost as it would “most
likely” be performed, with an obvious level of contingency.
· Optimistic – As its name implies, Optimistic is the low value
scenario, meaning an activity cost based on prime conditions,
with no level of contingency.
· Pessimistic – Being the worst-case scenario for activity cost,
this looks at all the possibilities of risk and supplies cost for the
high end of the calculation.
Moving forward, the two averaging calculations are known as
the Triangular Distribution and the Beta Distribution. The
Triangular Distribution is quite simple, with the sum of the
scenarios being divided by 3, thereby giving an overall average
cost of the activity. The Beta Distribution is somewhat different
in its ability to supply an average that carries the overall weight
of the Most Likely scenario. Beta Distribution is calculated by
obtaining multiplying Most Likely by 4, and then adding
Optimistic and Pessimistic. Being this is the sum of 6 data
inputs, it is averaged by dividing by 6, thereby providing a
weighted average cost of the activity.
Conclusion
Though many means and methods can be determined in
estimating projects, as project managers we must utilize proven
techniques in which to provide accurate estimates, tailored to
meet the various project demanded scenarios, all the while in a
direct and productive manner. Within Top-Down and Bottom-

4. Up Estimating, and the various techniques given above, these
means and methods should provide just that, a tool in which the
project manager can ensure a successfully performed project.
References
Definition of estimate. https://www.merriam-
webster.com/dictionary/estimating
Project Management Institute, Inc. (2013). A Guide to the
Project Management Body of Knowledge (PMBOK®
Guide) (5th ed.). Newtown Square, PA: Project Management
Institute, Inc.
Week One - Assignment Content
1.
Top of Form
Explain the factors that determine how a company selects a
project.
Differentiate between top-down and bottom-up estimates,
including when each would be used.
· Top-Down – This type of estimating is generally less accurate;
it is used at the beginning of the project when developing the
overall scope statement or project charter for rough orders of
magnitude estimating in general project planning within the
organization. (pg. 197)

5. · Bottom-Up – This type of estimating is generally more
accurate because it starts at the bottom with the detailed costs
of all specific components of each work activity and
progressively forms the sum of all costs used in estimating the
project budget. (pg.197)
Determine the methods for estimating project costs.
· Analogues Cost Estimating – uses information from previous
project activities that are similar in scope, complexity, and
requirements of deliverable as a comparable for estimating costs
of new project activities. (pg. 193)
· Parametric Cost Estimating – uses the same bases of analogous
estimating from historical data of previous projects and similar
activities but utilizes a statistical or scalable component to
derive a relevant cost estimate. (pg. 194)
· Three-Point Cost estimating – cost information of components
within work activities that would suggest not only one absolute
value, but also a range of value that might represent a variety of
influences that could swing the cost to a positive or negative
direction. Three-point cost estimating utilizes both optimistic
and pessimistic values to calculate an expected cost. (pg. 194-
195)
Explain the types of costs.
· Direct Cost – These costs are associated directly with work
activities required to produce project deliverables. (pg. 190)
· Labor
· Materials
· Equipment
· Consulting
· Travel
· Indirect Costs – These costs include all other operations costs
incurred by the organization to support the production of a

6. project deliverable. (pg.190)
· Overhead expenses
· Administrative costs
· Indirect labor
· Indirect materials
Format your 700- to 1,050-word paper consistent with APA
guidelines.
Submit the assignment.
Bottom of Form
Reference
Wilson, R. (2014). A Comprehensive Guide to Project
Management Schedule and Cost Control: Methods and Models
for Managing the Project Lifecycle.
Week One
-
Assignment Content
1.
Explain
the factors that determine how a company selects a project.
Differentiate

7. between top
-
down and bottom
-
up estimates, including when each would be used.
·
Top
-
Down
–
This type of estimating is
generally less accurate; it is used at the beginning of the
project when developing the overall scope statement or project
charter for rough orders of
magnitude estimating in general project planning within the
organization.
(pg. 197)
·
Bottom
-
Up
–
This typ
e of estimating is generally more accurate because it starts at
the bottom

8. with the detailed costs of all specific components of each work
activity and progressively forms
the sum of all costs used in estimating the project budget.
(pg.197)
Determine
the
methods for estimating project costs.
·
Analogues
Cost Estimating
–
uses information from previous project activities that are
similar
in scope, complexity, and requirements of deliverable as a
comparable for estimating costs of
new project activities.
(pg. 193)
·
Parametric Cost Estimating
–
uses the same bases of analogou
s estimating from historical data
of previous projects and similar activities but utilizes a

9. statistical or scalable component to
derive a relevant cost estimate.
(pg. 194)
·
Three
-
Point Cost estimating
–
cost information of components within work activities that
would suggest not only one absolute value, but also a range of
value that might represent a
variety of influences that could swing the cost to a positive or
negative direction. Three
-
point
cost es
timating utilizes both
optimistic
and
pessimistic
values to calculate an expected cost.
(pg.
194
-
195)
Explain
the types of costs.

10. ·
Direct Cost
–
These
costs are
associated
directly with
work activities required to produce
project
deliverables
.
(pg. 190)
o
Labor
o
Materials
o
E
quipment
o
Consulting

11. o
Travel
·
Indirect Costs
–
These costs
include all other operations cost
s incurred by the organization to
support the production of a project
deliverable
.
(pg.190)
o
Overhead expenses
o
Administrative costs
o
Indirect labor
o
Indirect materials

12. Format
your 700
-
to 1,050
-
word paper consistent with APA guidelines.
Submit
the assignment.
Week One - Assignment Content
1.
Explain the factors that determine how a company selects a
project.
Differentiate between top-down and bottom-up estimates,
including when each would be used.
-Down – This type of estimating is generally less
accurate; it is used at the beginning of the
project when developing the overall scope statement or project
charter for rough orders of
magnitude estimating in general project planning within the
organization. (pg. 197)
-Up – This type of estimating is generally more
accurate because it starts at the bottom
with the detailed costs of all specific components of each work
activity and progressively forms
the sum of all costs used in estimating the project budget.

13. (pg.197)
Determine the methods for estimating project costs.
Analogues Cost Estimating – uses information from previous
project activities that are similar
in scope, complexity, and requirements of deliverable as a
comparable for estimating costs of
new project activities. (pg. 193)
– uses the same bases of
analogous estimating from historical data
of previous projects and similar activities but utilizes a
statistical or scalable component to
derive a relevant cost estimate. (pg. 194)
-Point Cost estimating – cost information of
components within work activities that
would suggest not only one absolute value, but also a range of
value that might represent a
variety of influences that could swing the cost to a positive or
negative direction. Three-point
cost estimating utilizes both optimistic and pessimistic values to
calculate an expected cost. (pg.
194-195)
Explain the types of costs.
– These costs are associated directly with work
activities required to produce
project deliverables. (pg. 190)
o Labor
o Materials
o Equipment
o Consulting
o Travel
– These costs include all other operations costs

14. incurred by the organization to
support the production of a project deliverable. (pg.190)
o Overhead expenses
o Administrative costs
o Indirect labor
o Indirect materials
Format your 700- to 1,050-word paper consistent with APA
guidelines.
Submit the assignment.