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Bottom-Up Estimating

5 minutes 5 Questions

As the name implies, bottom-up estimating starts at the lowest level of the Work Breakdown Structure (WBS) and moves upwards to calculate the total estimate. This method gives a detailed and accurate estimate because it identifies costs at the task level. Though time-consuming and resource-intensive, it gives a thorough understanding of where the project costs are going, and can hence be used to justify costs to stakeholders.

Guide to Bottom-Up Estimating

Why it is important:
Bottom-Up Estimating is crucial as it brings a higher degree of accuracy to project management. By breaking down complex problems into individual costs and time estimates, it enables accurate forecasting and procurement planning.

What it is:
Bottom-Up Estimating is a technique in project management where each task is individually estimated for costs and time and then summed up for total project estimation. It is often used when there is a high level of clarity regarding project tasks.

How it works:
It starts by breaking the project into smaller, manageable tasks. Each task is then estimated separately, and the estimates are added together to determine the overall project estimation. This method allows more detailed and accurate estimates, but it is also time-consuming and resource-intensive.

Exam Tips - Answering Questions on Bottom-Up Estimating:
1. Define the term: Clearly define what Bottom-Up Estimating is - a detailed and accurate method of project estimation by calculating each individual task.
2. Provide examples: Include an example of how to carry out Bottom-Up Estimating, breaking down a project into tasks, estimating each, and summing them all.
3. Highlight the advantages: Emphasize on the accuracy and detailed nature of this technique. Discuss how it can lead to better project planning and management.
4. Discuss the downsides: Note that it is time-consuming and requires more resources.

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CAPM - Estimation Techniques Example Questions

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Question 1

In a large-scale software project, different sub-teams have provided detailed time estimates for their respective parts. What should you do to estimate the project timeline using the bottom-up estimating method?

Correct Answer: Combine the time estimates from all sub-teams, considering dependencies, to determine the project timeline.

The Best answer is to combine the time estimates from all sub-teams, considering dependencies, to determine the project timeline. This is the core principle of the bottom-up estimating method, which is used to develop an estimate by aggregating the estimates of the lower, more detailed levels of work. It's a more accurate method because it uses actual estimates from the people performing the work. Other choices are wrong because they either over-simplify the process such as choosing the longest time estimate provided by a sub-team and multiplying it by the number of sub-teams (it doesn't take into account that different teams may have different workloads), or involve methods that are not related to bottom-up method like using Critical Path Method (CPM) which is a step-by-step project management technique to identify critical tasks, or using analogues from past projects (analogous estimating), which doesn't ensure accuracy as no two projects are exactly the same.

Question 2

A construction project is divided into several subprojects, each managed by a different contractor. The project manager has received detailed cost estimates from each contractor for their respective work packages. To determine the total project budget, the project manager should:

Correct Answer: Aggregate the individual estimates from each contractor to calculate the total project budget, utilizing the bottom-up estimating technique.

The best approach for the project manager is to aggregate the individual cost estimates from each contractor to calculate the total project budget. This bottom-up estimating technique ensures that the budget reflects the most accurate and detailed information available from the contractors who are directly responsible for their respective work packages. The other options are less effective because they either ignore the detailed estimates provided by the contractors, attempt to fit the estimates into a predetermined budget, or assume that averaging the estimates will yield an accurate total budget without considering the specific scope and requirements of each subproject.

Question 3

A project manager is overseeing a software development project. The individual teams have submitted their estimates for their tasks. Which method would be the most appropriate for determining the overall estimate for the entire project?

Correct Answer: Bottom-Up Estimating

Bottom-Up Estimating is the most appropriate method for determining the overall estimate for the entire project when individual teams have already provided their estimates for their tasks. This is because Bottom-Up Estimating is a method of estimating project time and cost by aggregating detailed estimates of individual tasks or work activities. This means that the project manager would consider the estimates given by each team and then aggregate this data to form the overall estimate for the project. On the other hand, Top-Down Estimating is a method that starts with the total project and breaks it down into manageable components or tasks. This would not be suitable here as the individual team estimates have already been provided. Parametric Estimating uses statistical modeling to develop a cost estimate. It involves the use of project-specific data and statistical relationships to generate a cost estimate. It's often less accurate than the other methods as it doesn’t necessarily take into account the specific details of every task. Hence, it's not the best option for this situation. Finally, Analogous Estimating uses the experience of past projects to estimate the duration and cost of the current project. It is less time-consuming and costly than other techniques, but it may not be as accurate as Bottom-Up Estimating, especially if the past data used for estimation doesn't accurately reflect the current project's conditions.

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