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Chapter 5 –  Estimating Project Times and Costs Definition, Types, Influencing factors, Guidelines, Macro vs. Micro, Methods, Cost types  10/27/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Course Structure 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Estimating ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Estimates Are Needed to …   (1) 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) EXHIBIT 5.1 ,[object Object],[object Object],[object Object],[object Object]
Estimates Are Needed to …   (2) 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) EXHIBIT 5.1 ,[object Object],[object Object],[object Object]
Factors Influencing the Quality of Estimates 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) People Quality of Estimates Project Duration Project Structure and Organization Padding Estimates Organization Culture Other (Nonproject) Factors Planning Horizon
Estimating Guidelines for Times, Costs, and Resources  (1) ,[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Estimating Guidelines for  Times, Costs, and Resources  (2) ,[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Macro versus Micro Estimating 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.1 Conditions for Preferring Top-Down or Bottom-Up Time and Cost Estimates Condition  Macro Estimates  Micro Estimates (Top-down) (Bottom-up) Strategic decision making  X  Cost and time important  X High uncertainty  X Internal, small project  X Fixed-price contract  X Customer wants details  X Unstable scope  X
Estimating Projects: Preferred Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Methods for Estimating Project Times and Costs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) Project Estimate Times Costs
Apportion Method of Allocating Costs Using the WBS 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.1
Simplified Basic Function Point Count Process for a Prospective Project or Deliverable 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.2
Example: Function Point Count Method 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.3
Methods for Estimating Project  Times and Costs (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
SB45 Support Cost Estimate Worksheet 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.2
Phase Estimating over Product Life Cycle 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.3
Level of Detail -  (1) ,[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Level of Detail -  (2) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Types of Costs Direct Costs Project Overhead Costs General & Administrative Overhead Costs 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Direct Costs ,[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Direct (Project) Overhead Costs ,[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
General and Administrative Overhead Costs ,[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Contract Bid Summary Costs 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.6 Direct costs  $80,000 Direct overhead  $20,000 G&A overhead (20%)  $20,000 Profit (20%)  $24,000 Total bid  $144,000
Three Views of Cost 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.5
Refining Estimates -  (1) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Refining Estimates -  (2) ,[object Object],[object Object],[object Object],[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Refining Estimates -  (3) ,[object Object],[object Object],10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
Creating a Database for Estimating 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.7 Estimating Database Templates
Key Terms 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) Apportionment methods Bottom-up estimates Contingency funds Delphi method Direct costs Function points Interaction costs Learning curves Overhead costs  Padding estimates Phase estimating Ratio methods Template method Time and cost databases Top-down estimates

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Estimating Time & Costs

  • 1. Chapter 5 – Estimating Project Times and Costs Definition, Types, Influencing factors, Guidelines, Macro vs. Micro, Methods, Cost types 10/27/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
  • 2. Course Structure 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
  • 3.
  • 4.
  • 5.
  • 6. Factors Influencing the Quality of Estimates 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) People Quality of Estimates Project Duration Project Structure and Organization Padding Estimates Organization Culture Other (Nonproject) Factors Planning Horizon
  • 7.
  • 8.
  • 9. Macro versus Micro Estimating 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.1 Conditions for Preferring Top-Down or Bottom-Up Time and Cost Estimates Condition Macro Estimates Micro Estimates (Top-down) (Bottom-up) Strategic decision making X Cost and time important X High uncertainty X Internal, small project X Fixed-price contract X Customer wants details X Unstable scope X
  • 10.
  • 11.
  • 12. Apportion Method of Allocating Costs Using the WBS 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.1
  • 13. Simplified Basic Function Point Count Process for a Prospective Project or Deliverable 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.2
  • 14. Example: Function Point Count Method 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) TABLE 5.3
  • 15.
  • 16. SB45 Support Cost Estimate Worksheet 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.2
  • 17. Phase Estimating over Product Life Cycle 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.3
  • 18.
  • 19.
  • 20. Types of Costs Direct Costs Project Overhead Costs General & Administrative Overhead Costs 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson)
  • 21.
  • 22.
  • 23.
  • 24. Contract Bid Summary Costs 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.6 Direct costs $80,000 Direct overhead $20,000 G&A overhead (20%) $20,000 Profit (20%) $24,000 Total bid $144,000
  • 25. Three Views of Cost 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.5
  • 26.
  • 27.
  • 28.
  • 29. Creating a Database for Estimating 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) FIGURE 5.7 Estimating Database Templates
  • 30. Key Terms 10/01/07 SJSU - Bus. 286 David Bentley (Gray & Larson) Apportionment methods Bottom-up estimates Contingency funds Delphi method Direct costs Function points Interaction costs Learning curves Overhead costs Padding estimates Phase estimating Ratio methods Template method Time and cost databases Top-down estimates