Time and Cost Estimating Techniques

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Time and Cost Estimating Techniques

Estimating work times provides several benefits for the project manager. It gives an idea of the level of effort required to complete a project. This information then enables the project manager to produce a realistic plan based upon that effort. Estimating also helps the project manager anticipate the budget for the project.

There are many formal techniques available to estimate time and cost for activities. Please refer to the Project Management Reference Section for more details on these techniques. Anyone reviewing these estimates should understand that they are approximations, not accuracies.

Although the formal techniques are very specific, most of them have the following tasks in common:

  • Break activities down into small pieces for easier and more accurate estimation. (WBS)
  • Review historical information and compare to current activities.
  • Include a contingency buffer for potential risks.
  • Solicit advice from others that have previously completed similar activities.
  • Identify and document the assumptions and parameters used to derive the estimates.

Microsoft Project

Microsoft Project is project management software. Project management software assists project managers by providing a means for organizing project information. A project manager uses the software to enter and maintain a workplan that organizes activities and details. The software calculates the scheduled dates for tasks based on the time or work requirements of each task using a calendar of working days for the project and its resources.

Microsoft Project is a tool to assist project managers in creating a WBS, PERT Charts, Gantt Charts, and resource histograms. Other reports and charts are also readily available for use and customization. AIS project team members and managers should use the latest version.

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PERT/CPM

Network analysis techniques identify early and late start and finish dates for the uncompleted portions of project activities. The Program Evaluation and Review Technique (PERT) and the Critical Path Method (CPM) are examples of network analysis techniques.

The Program Evaluation and Review Technique (PERT) is an event-oriented technique used to show all the project tasks, dependencies, and earliest and latest start times for each task in graphical form. It is used to estimate project duration when there is a high degree of uncertainty with the individual activity duration estimates.

The Critical Path Method (CPM) is a technique used to ...

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