This document discusses various techniques for project estimation including expert opinion, analogous estimation, parametric estimation, three point estimation, and bottom-up estimation. It emphasizes that additional estimation efforts yield diminishing returns and that more detailed plans are not always better. While overestimation can waste money and resources, underestimation risks missing deadlines and reducing project effectiveness. The key is balancing estimation efforts with accuracy to develop reasonable plans.

1. Estimation
Prepared By – Ghanashyam Hinge

2. Content
 Efforts for Estimation
 Efforts Vs. Accuracy
 Types Of Estimation
 Expert Opinion
 Analogous Estimation
 Parametric Estimation
 Three Point Estimation
 Bottom-Up Estimation
 Overestimate
 Underestimate

3. "Is it always better to have a more detailed plan?“
Let's look at 3 simple examples - each more detailed than the last
1) Brijesh will do task A and then he will do task B
2) Brijesh will do task A in approximately 2 hours and, after finishing it, he will do task
B in approximately 3 hours.
3) Brijesh, who will probably be wearing his favorite yellow shirt, will do task A in
approximately 2 hours and, after finishing it, he will do task B in approximately 3
hours, but only after taking a 45 minute lunch break.
• It's clear from #3 that more detailed plans aren't always better.
• On the other hand, the level of detail in plan #2 may seem more reasonable than
plan #1. Of course, it depends on the precision of those estimates and the amount
of time it takes you to make them.
• If it took you 2 hours to figure out that it should take Brijesh 5 hours to complete
his tasks, I bet you would have preferred that he just got started.
Efforts for Estimation

4. Efforts Vs. Accuracy
We cannot eliminate uncertainty from estimates, but they embrace the idea that small
efforts are rewarded with big gains.
Additional estimation effort yields very little value beyond a certain point.

5. Types Of Estimation

6. If you want to know how long something is likely to take, ask an expert. At least,
that’s one approach. In an expert opinion-based approach to estimating, an expert
is asked how long something will take or how big it will be. The expert relies
on his / her intuition or gut feel and provides an estimate.
A nice benefit of estimating by expert opinion is that it usually doesn’t take very
long.
Expert Opinion

7. Analogous Estimation
In Analogous Estimation, the cost / time of the project is guessed by
comparing it with any similar project previously completed by your organization.
Here you will look into your organization’s historical records for previously
completed projects. You will select the project which is closest to your project.
This technique is used to estimate the project cost / time when very little detail
about the project is available. Therefore, this technique does not provide a very
reliable estimation. The primary benefits of this technique are: it is very fast, less
costly, and provides a quick result.

8. Parametric Estimation
This technique also uses historical information to calculate the cost estimates.
However, there is a difference between this technique and the analogous estimation
technique.
Parametric Estimation technique uses historical information along with
statistical data. It takes variables from the similar project and applies them to the
current project. For example, in the previous project, you will see that it took 2Hrs per
drawing and now we got similar type of drawings with additional activity of 1Hrs per
drawing then multiply the number of drawings by 3Hrs. and you will get the estimation
for your project. In short no need to estimate each and every drawing.
The accuracy of this process is better than the analogous estimation.

9. This technique is used to reduce the biases and uncertainties in estimating assumptions.
Instead of finding one estimate, three estimates are determined and then their average
is taken to reduce the uncertainties, risks and biases.
PERT (Program Evaluation And Review Technique) is the most commonly used method
in three point estimation technique.
Most Likely Cost (Cm): This cost estimate considers everything goes as normal.
Pessimistic Cost (Cp): This considers the worst case and it assumes that almost
everything goes wrong.
Optimistic Cost (Co): This estimate considers the best case and assumes that
everything goes better than planned.
PERT Estimate formula is:
Ce = (Co + 4Cm + Cp) / 6
Where, Ce = Estimated Cost
Three Point Estimation

10. Bottom-Up Estimation
The Bottom-Up Estimating technique is also known as the “definitive technique”.
This estimation technique is the most accurate, time-consuming, and costly
technique to estimate the total number of hours. In this technique, the number of
hours of each single activity is determined with the greatest level of detail at
the bottom level and then rolls up to calculate the total number of hours.
Here, the total project work is broken down into the smallest work components. Its
time requirement is estimated and then finally, it is aggregated to get the total time
estimate of the project.

11. Overestimate
COST +COST -
TIME +
TIME -
Less Time – Impact on delivery
High cost – Wastage of money
Less Time – Impact on delivery
Less cost – Impact on Profit
High Time – Loss of resources
High cost – Wastage of money
OVERESTIMATE
High Time – Loss of resources
Low cost – Impact on Profit
You estimated your project
Estimation closer to the center (Bigger star) is always a good estimation

12. Underestimate
 Reduced effectiveness of project plans
 Statistically reduced chance of on-time completion
 Poor technical foundation leads to worse-than-nominal results
 Destructive late-project dynamics
Never intentionally underestimate. The penalty for underestimation is more severe than
the penalty for overestimation.

13. Thank You