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Estimation Techniques

5 minutes 5 Questions

Estimation Techniques in project scheduling involve the prediction of the amount of time, resources, and costs required to complete a project. Some popular methods include Expert Judgment, Analogous Estimation, Parametric Estimation, Three-point Estimation, and Bottom-Up Estimation. Good estimation provides a clear vision, enhances efficiency, and helps stakeholders to make informed decisions.

Project Scheduling: Estimation Techniques

Estimation Techniques are crucial methods within Project Management, specifically under CAPM (Certified Associate in Project Management).
Why is it important? Estimation Techniques allow project managers to predict the amount of time, resources and costs that will be needed to successfully complete a project. Making accurate estimates is vital for creating an effective project schedule and for successful project delivery.
What is it? Estimation techniques include methods such as Analogous Estimating, Parametric Estimating, Bottom-Up Estimating, Three-Point Estimating and Expert Judgement.
How does it work? Each method involves different ways of calculating estimates. For example, Analogous estimating uses the values of parameters from previous similar projects as basis; Parametric estimating uses statistical relationship between variables; and Three-point estimating uses three estimates to define an approximate range for an activity's cost.
How to answer questions on Estimation Techniques in an exam: Exam Tips: Understanding the differences and appropriate applications of each estimation technique is key. Be prepared to answer questions regarding the advantages and disadvantages of each technique, and how, when and why they would be used in a project. Practicing estimation calculations may also appear in exam questions.

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CAPM - Project Scheduling Example Questions

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Question 1

During the Sprint Planning meeting, a team member proposes to use Ideal Time for estimation instead of Story Points due to his understanding of the concept. As a Scrum Master, how would you explain the difference between these two estimations techniques?

Correct Answer: Ideal Time is a representation of how much time a task will take when stripped of all interruptions, while Story Points act as a measure of effort that takes into account the complexity, risk, and uncertainty of a task.

The first answer is the best one due to its comprehensive understanding of the concepts. It rightly defines the key differences between Ideal Time and Story Points, stating that 'Ideal Time' is a representation of how much time a task will take if there were no interruptions, conversely, 'Story Points' take into account the complexity, risk, and uncertainty of a task, making it a more comprehensive and efficient estimation technique. This understanding aligns with the Scrum framework as it values individuals, interactions, customer collaboration, and response to change rather than strict timelines. The second, third, and fourth answers are incorrect. The second gives a misleading concept, noting ideal time considers complexity while story points only consider time, which is not true. The third statement is flawed as there's no universal 'better' or 'preferred' method, it generally depends on the team's agreement. Lastly, the fourth assertion is incorrect because the use of Ideal Time or Story Points doesn't automatically categorise a project as simple or complex.

Question 2

A project manager needs to estimate the time and cost for a new software development project. The project has many unknown factors and may involve new technology. Which estimation technique should they use?

Correct Answer: Expert Judgement

Expert Judgement is most suitable in this scenario, as it allows the project manager to consult experts for their opinion on the unknown factors and new technology, ensuring a more accurate estimation.

Question 3

The project manager is overseeing a project that is quite similar to a previous project completed by the organization. The manager wants to use a method of estimation that will leverage this past experience. Which estimation technique is the best to apply?

Correct Answer: Analogous estimation

The Analogous estimation technique is the best to apply in this scenario because it uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project. This method is most reliable when the previous activities are similar in fact and not just in appearance. The other techniques aren't as suitable. Parametric estimation involves using statistical modeling and historical data to calculate a cost, but it is not always accurate if the nature of the costs has changed. Bottom-up estimation involves estimating the cost of individual activities or work packages and then adding these up - this is too time-consuming and not necessary when a similar previous project can be referred to. Three-point estimation involves estimating an optimistic, most likely, and pessimistic cost to arrive at a cost estimate. This technique is generally used when there is a high degree of uncertainty about the individual activity cost elements.

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