PM: Estimating

1.  Projects by definition, include a large degree of uncertainty.
2. "To predict costs. The art of approximating the probable worth (or cost), extent, quantity, quality, or character of something based on information available at the time." -NASA
3. You have decided to repaint your living room. You want to go buy the paint but you must first figure out how much you need. How many gallons will you need, and how much will it cost?
1. Basic Information:
2. 1 gallon of paint covers 350 sq ft. and costs 27 Pounds
3. Room is 16X14ftX8 with one door 3X7 and three windows (3X4)
4. Paint all surfaces with 2 coats. No fractional gallons.
5. Solution: 108 pounds
4. You have the least amount of information at the beginning of a project, but the greatest need for estimation. Making the correct choices early can save money later.
5. Proposal Estimate: +/- 50 % feasibility (AACE: Concept screening -> class 5)
6. Budget Estimate: +/- 20 % viability (AACE: feasibility -> class 4, pre-design)
7. Sanction: +/- 10 % obtain funding (AACE: budget estimate -> class 3)
8. Control: +/- 5 % measure progress, assign resources (AACE: definitive class 2)
9. Tender: +/- 2 % prepare tender (AACE: detailed -> class 1)
1. CTR:Cost, Time, Resource
10. Estimating Methods:
1. subjective: historical project comparisons
2. parametric: proportional
3. analytical
11. Cost Components 
1. labor
2. materials
3. equipment (buy/lease) Cap-Ex vs Op-Ex
12. Data sources
1. supplier quotations
2. trade literature, technical literature
3. company historical data
4. computer systems
5. government figures
13. Estimating Accuracy 
1. level of accuracy depends on:
1. relative size of part and project
2. level of WBS
3. error in the part & in the project