Estimating project times and costs chapter 5

what is the preparation costs of top-down estimates

1/10 to 3/10 of a percent of total project cost

what is the preparation costs of bottom-up estimates

3/10 of a percent to 1% of total project costs

The cost to prepare bottom-up estimates will typically run how much more than the costs to prepare the top-down estimates?

about 3 times as much

Which of the following top-down methods is used when projects closely follow past projects in features and costs and result in costs being assigned by percentages to major segments of the project?

apportion

which top down methd is used when projects closely follow past projects in features and costs. Estimates can be made quickly with little effort and reasonable accuracy

apportion methods

which top-down method uses authorization to pay contractors by completion of specific segments of a house. For example, foundation might represent 3%, framing 25%, electric 15% and so on

apportion methods

can serve as a check on cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables

bottom up approach

provides the customer with an opportunity to compare the low-cost, efficient method approach with any imposed restrictions

bottom up approach

what is the intended use of bottom-up estimates

budgeting scheduling resource requirements fund timing

changes often have to be made midstream to respond to new demands by the customer is an example of which reason to refine estimates

changes in project scope and plans

what is the best way to improve estimates

collect and archive data on past project estimates and actuals

what factors influence the level of detail in the WBS

complexity of the project need for control project size cost duration other factors

Top-down estimates are most likely to occur during the ______ phase.

concept

This method uses the pooled experience of senior and or middle managers to estimate the total project duration and costs

consensus method

what are the top down approaches for estimating project times and costs

consensus method ratio method apportion method function point method learning curves

work package estimates should not include allowances for_____________________

contingencies

as the difficulty of the work decreases the expected improvement _______________________

decreases and the improvement ratio that is used becomes greater

these costs are clearly chargeable to a specific work package

direct costs

these costs represent real cash outflows and must be paid as the project progresses

direct costs

what are the types of costs associated with a project

direct labor costs direct project overhead costs general and administrative overhead costs

examples of this cost include salary of the PM and temporary rental space for the project team

direct project overhead costs

these costs can be tied to project deliverables or work packages, examples include the salary of the PM and temporary rental space

direct project overhead costs

This consensus method uses a panel of experts familiar with the kind of project in question and uses anonymous estimate questionnaires to reach a decision

Delphi Method

what does a learning curve tell management

each time the ouput quantity doubles, the unit labor hours are reduced at a constant rate

The process of forecasting or approximating the time and cost of completing project deliverables is called

estimating

what is the intended use of top-down estimates

feasibility/conceptual phase rough time/cost estimate fund requirements resource capacity planning

Sean is forecasting the time and cost of developing a customized software program by looking at the number of inputs, outputs, inquires, files, and interfaces. Which of the following methods is he using?

function point

the software industry frequently estimates using weighted macro varibles called________________________

function point methods

which top-down method uses major parameters such as number of inputs, number of outputs, number of inquiries, number of data files, and number of interfaces

funtion point methods

these costs are usually allocated as a percent of the total direct cost, or a percent of the total of a specific direct cost such as labor, materials, or equipment

general and administrative overhead costs

these costs represent organization costs that are not directly linked to a specific project

general and administrative overhead costs

People working on prototype development needing time to interact with the design engineers after the design is completed is an example of:

hidden interaction costs

time and costs devoted to managing interactions rises exponentially as the number of people and different diciplines involved increases on a project reflects which reason to refine estimates

interaction costs are hidden in estimates

Learning curves are more likely to apply in situations where most of the costs are

labor

what type of costs are considered direct labor costs

labor materials equipment

the pattern of improvement

learning curve

what is the preferred approach in defining the project estimates

make rough top-down estimates, develop the WBS, make bottom-up estimates, develop schedules and budgets, and reconcile differences between top down and bottom up estimates

what is the accuracy of bottom-up estimates

minus 10% to plus 30%

The accuracy of top-down estimates will typically be in the range of

minus 20% to plus 60%

what is the accuracy of top-down estimates

minus 20% to plus 60%

Work package estimates should be based on what kind of conditions

normal

resource shortages, whether in the form of people, equipment, or materials, can extend original estimates is an example of which reason to refine estimates

normal conditions do not apply

the tendency of people to overestimate how quickly they can get things done and underestimate how long it will take them to complete tasks is an example of which reason to refine estimates

overly optimistic

Janet is forecasting how much money her department needs to support a new project. She estimates that two people and $25,000 in expenses will cover her needs. Because management typically insists on reducing forecasts by 20 percent, she increases her estimates to allow for that reduction. Which of the following factors is illustrated in this situation?

padding estimates

which bottom-up approach uses cost per task to determine total cost of project

parametric procedures

The approach that begins with a top-down estimate for the project and then refines estimates as the project is implemented is known as ______ method

phase estimating

which bottom-up approach is used when an unusual amount of uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project

phase estimating

which bottom-up approach uses a detailed estimate to develop estimates for the immediate phase and a macro estimate for the remaining phases of the project

phase estimating

which estimating approach is preferred by those working on projects where the final product is not known and the uncertainty is very large, for example, the integration of wireless phones and computers

phase estimating

estimates of current events are close to 100 percent accurate but are reduced for more distant events

planning horizon

what factors influence the quality of estimates

planning horizon project duration people project structure and organization padding estimates organization culture nonproject factors

which bottom-up approach is popular in software and new product projects where up-front requirements are fuzzy and not well known

range estimating

which bottom-up approach uses three time estimates--low, average, and high to determine total project cost

range estimating

which bottom-up approach works best when work packages have significant uncertainty associated with the time or cost to complete

range estimating

Which top down method uses, for instance, the number of square feet to estimate the cost and time to build a house; that is a house of 2700 square feet might cost $160 per square foot.

ratio method

Which guideline allows persons most familiar with the task to use their experience and best judgemnt to develop useful work package estimates?

responsibility

what are the seven guidelines to develop useful work package estimates

responsibility use several people to estimate normal conditions time units independence contingencies adding risk assessment

when project promoters underestimate the costs of projects and overestimate project benefits in order to win approval, like in public works projects, is an example of which reason to refine estimates

strategic misrepresentation

Project costs are typically viewed from all of the following except:

sunk

which bottom-up approach uses the costs from past projects as a starting point for the new project

template

The bottom-up approach for estimating times and costs that uses costs from past projects that were similar to the current project is known as:

template method

what are the bottom-up approaches for estimating project times and costs

template method parametric procedures applied to specific tasks range estimating a hybrid phase estimating

design flaws are revealed after the fact, extreme weather conditions occur, accidents happen is an example of which reason to refine estimates

things go wrong on projects

Design flaws being revealed after the fact, extreme weather conditions, and accidents occurring are examples of:

things going wrong on a project

what is the collection and archival of data on past project estimates and actuals

time and cost databases

estimates made by top managers who have very little knowledge of component activities used to complete the project

top-down estimates

usually derived from someone who uses experience and or information to determine the project duration and total cost

top-down estimates

Which guideline allows for a better chance of being reasonable and realistic when several people with relevant experience and or knowledge of the task are used.

use several people to estimate

when are top down methods useful

when experience and judgement have been accurate in the past

Reasons why estimating time and cost are important include all of the following except:

A) To schedule work B) To determine how long the project should take and cost C) To develop cash flow needs D) To determine how well the project is progressing E) All of the above are valid reasons E) all of the above

Which of the following is not one of the recommended guidelines for developing useful work package estimates?

A)Estimates should be made by those responsible for the work B) Use several people to estimate the same work C) Estimates should be based on normal conditions D) Estimates should include a normal level of contingency E) Estimates should be independent of other projects D) estimates should include a normal level of contingency