Estimation Methods for PMP Exam

In project cost and time management, estimations are required during project planning as we cannot know things in future for sure. There are at least five estimation methods mentioned in the PMBOK® Guide, namely:

• One-point Estimating
• Analogous Estimating
• Parametric Estimating
• Three-point Estimating
• Bottom-up Estimating

This post will expound on the similarities and differences between these estimation methods and what Aspirants would need to know for the exam.

Estimation Methods

• One-point Estimating
  • provides a single estimate either through expert judgement, historical information or purely guessing
  • pro: extremely fast
  • con: considered not accurate as estimation is totally based on a member of the project staff
• Analogous Estimating
  • a form of One-point Estimating
  • the estimating is made based on comparison with a similar project/task in the past with similar scope
  • pro: fast
  • con: not accurate
• Parametric Estimating
  • a form of One-point Estimating
  • used for estimations where the tasks are “quantitatively based” (i.e. that can be expressed as cost/time per unit)
  • pro: fast and more accurate than analogous estimating
  • con: limited usage as not many tasks are quantitatively based
• Three-point Estimating
  • to account for uncertainties by estimating through different scenarios (and probably by different project staff)
  • the estimations for the optimistic scenario (represented by O), most likely scenario (represented by M) and pessimistic scenario (represented by P) are first arrived out and calculation is based on the weighted formula (PERT Estimate):
    • (O + 4M + P) / 6
  • pro: more accurate and less time-consuming than bottom-up estimating
  • con: accuracy is dependent on the attitude/character (e.g. optimistic/pessimistic character) of different project staff
• Bottom-up Estimating
  • detailed analysis of the resources and scope involved in each task is carried out before arriving at the estimation by adding up the estimations of various components
  • to be carried out when accuracy of estimation is of top concern as a lot of work is required
  • pro: most accurate as the tasks are analyzed in details
  • con: very time-consuming and requires lots of human resources input

Conclusion

Among the various estimating methods mentioned in the PMBOK® Guide, the Analogous Estimating, Parametric Estimating and Three-point Estimating are most commonly used in actual projects.

Hope this article can illustrate the differences between various estimation methods for Aspirants well.