Bottom-Up Estimating Project Cost Estimation: Examples Video & Lesson Transcript

Once your project roadmap is created — with a bottom-up approach, including input from all stakeholders — it’s time to assign tasks and track progress. An outcome of a bottom-up approach to project management is a roadmap. • The planning model in Figure 6.1 is a complete description of a bottom-up estimating technique. You would have a defined workflow and know the teams you need to onboard. You can even seek help from the different people involved in the project to improve your estimate’s effectiveness.

• Bottom-up analysis is one of the key project management methodologies to obtain accurate estimations for a project.
• He works with his crew to estimate the cost and duration for each of these.
• Bottom-up estimating presents a clearer picture of project components, allowing team members to take ownership of segments and ensuring you’ve considered all factors in your project.
• For example, you are considering a full-contracting construction project.
• For example, a company is estimating the cost of a new website development project.
• Using this estimation method, you must first understand that the project has both duration and cost constraints, predefined chiefly defined in the project charter.
• It starts with gathering the details at the lowest level of the work breakdown structure and estimating work for each work package.

For components of the entire house, Lance decomposes the work involved in building the basic framework of a house. He also breaks out things like flooring, electric, heat, and plumbing.

TOPIC: Using the Bottom-up and Analogous estimating

Bottom-up estimating is estimating how many resources are needed to complete a project. It usually starts by assigning tasks from the work breakdown structure to team members, and then the resource estimates the time/ cost required for each study. Considering the expertise, knowledge, and skill required to complete each task is essential.

With this methodology, you will determine the exact phases and elements involved in completing the project. You will know what things you need to consider to complete the project successfully. A key role of an estimator is to question the assumptions that underlie the work. The best way to do this is by having a dialogue with the project team. In order to get good requirements, we need to talk with people who have a good understanding of what they want from their new system. We also need to talk with people who understand technical issues like system architecture, performance, capacity planning, security and so forth. The more people involved in this process, the better off we’ll be because different perspectives will help us see things from different angles.

Bottom-up Estimating: From the Work Package

This ensures a more accurate project, and it empowers your team to get the job done. Use Wrike’s two-week free trial today to create a highly accurate bottom-up estimation for your next project. In its simplest form, bottom-up estimation looks at the individual costs and time duration required for each project task. The bottom-up estimation itself requires bottom up estimating a lot more resources than other techniques such as analogous estimating (top-down estimation). The light-blue rows in the above table show the estimates on the work package level (i.e. the sum of the estimates of the activities). The dark-blue lines represent the second level of aggregation – the sum of resources, costs and duration on a phase level .

Bottom-up estimating sounds intimidating, and it does require a lot of homework on the manager’s part — but it’s also a relatively straightforward process defined by these steps. In other words, underestimation of one component can be offset with adjustments to another. Ultimately, this means errors don’t significantly impact delivery, reducing impact on the budget.

Question 1: What are the tasks?

After coming up with the WBS, assigning tasks, and delegating to the team members, it is time to determine the projects’ resources and timeline. Therefore, lay all the specific resources and timeline of the project. You can use project management software such as Trello and many other platforms to break down your project to the smallest detail https://online-accounting.net/ you will need. Lance can use this approach because he has a devoted project team who can assist with estimates and because the stakeholders are more concerned with accuracy than speed. Bottom-up budgeting and cost estimation are critical to getting the project budget right and setting a realistic time frame to make it all happen.

• Finally, Wrike’s Gantt Chart offers a visual view of project progress that lets you keep track of all your work’s phases and dependencies.
• Luckily, this is something that could be reused in the future, reducing the amount of time involved.
• A good example is the cost estimate, which is used to draft the budget.
• Because the bottom-up technique involves examining all the tasks in the activity at a granular level, it is a time-consuming activity.
• As part of this process, you can encourage everyone on the team to ask questions and express their concerns.
• In the previous step, we mentioned that if you need to prepare a bill of materials, you should mention that in the scope.
• It helps break down your project into smaller but significant portions, which eventually ensures proper budgeting.

” is my preferred project estimation method—but it takes a lot more time than top-down planning. In the bottom-up approach, the project team has defined the tasks and can make accurate estimates at a detailed level.

What Is Bottom-Up Estimating? (And How It Differs from Top-Down)

This is definitely the best means of yielding scheduling figures for more extensive work packages. Bottom-up estimation is the preferred choice when detailed project scope of work is available. In this technique, you estimate the cost of all work packages, roll it up to WBS level and then add them all to the cost.

• The project manager doesn’t need to know every detail in this system or even be familiar with all the technology used.
• It is important because it allows project managers to plan and allocate resources accordingly.
• However, having a definitive estimate will help you avoid making losses in the long-run.
• In this way you can focus in on estimates where there is disagreement.
• When those with practical knowledge contribute to defining the overall project scope, elements like expenditures, personnel and timeline factors are less likely to be overlooked.
• Bottom-up estimating is the most accurate approach to estimating the cost and duration of project tasks.
• Read our detailed articles to learn more about analogous and parametric estimating.

To learn more about how to do bottom-up estimating, consider our online project management courses. You control the schedule and pace and have as many phone calls and live video conferences as you wish. This gives individual team members more control and influence, which can positively affect productivity and project viability. In this way, the technique can reduce perceived hierarchies and encourage teams to work together to arrive at solutions.

Reduces Errors

For example, analogous estimating is a good choice if you need a rough cost, but bottom-up estimating is the only option for an accurate result. A management reserve (10% of project costs as a thumb rule) can be added on top of the contingency reserve. A detailed WBS, an activity list, and a comprehensive list of project resources are prerequisites to a bottom-up estimate. With the help of this method, you will be able to obtain an accurate estimation of the project’s resources on a one-by-one basis. The next step is to ensure responsibility is shared across the team, rather than having everything filter back to you. The project manager doesn’t need to know every detail in this system or even be familiar with all the technology used.