Estimating Project Times and Costs

1. Estimating Project Times and Costs Chapter 5

2. Objectives • Methods of estimating times and costs • Using Learning curves • Types of costs

3. Methods for Estimating Project Times and Costs Project Estimate Times Costs • Macro (Top-down) Approaches • Consensus methods • Ratio methods • Apportion method • Function point methods for software and system projects • Learning curves

4. Micro (Bottom-up) Approaches • Template method • Parametric Procedures Applied to Specific Tasks • Detailed Estimates for the WBS Work Packages • Phase Estimating: A Hybrid

5. Why are good Time and Cost estimates important? • schedule work. • needed to determine how long the project should take. • needed to determine project cash flow needs. • needed to determine how well the project is progressing. • needed to establish the project baseline.

6. Considerations to Estimates

7. Types of Costs • Direct Costs • Costs that are clearly chargeable to a specific work package. • Direct (Project) Overhead Costs • Costs incurred that are directly tied to an identifiable project deliverable or work package. • General and Administrative Overhead Costs • Organization costs indirectly linked to a specific package that are apportioned to the project

8. Estimate duration times • Fairly certain if done before in other projects • derive average duration from historical data • Some projects books available containing mean tables for typical activities • Ask around

9. Estimate Resources • Four categories of resources • Money • Materials • Machines • People

10. Learning Curves • A person engaged in a repetitive task will improve his/her performance over time. • Airline industry was first industry to use Learning curves

11. Formulas • To determine Learning Curve rate: T2/T1 = T4/T2=T6/T3=T8/T4 • To determine time to produce nth or n units:

12. Any Questions?