Welcome to Part III of the Five Part Blog Series -- “Steps to Create an OUM Estimating Model”.
Today we will explore the different types of estimating models commonly used in the industry.
Types of Estimating Models
Bottom Up Estimating – A bottom up estimate decomposes the project down to very small components of work, for example, an Activity or a Task. It estimates each component to arrive at the estimate for the whole. This estimating approach is the most time consuming, but typically results in the most accurate estimate.
Top Down Estimating – A top down estimate applies experience from similar projects to arrive at an estimated overall effort, or a distribution of effort to project phases. For example, if you are estimating a WebCenter Portal engagement, you may create a top down estimate by reviewing past Portal projects with similar high-level requirements. Based on this information, you may arrive at a broad estimate for the project as a whole. You can also evaluate similar projects to understand high-level project metrics such as the % of overall effort consumed in each project phase. This information provides a good starting point for creating an estimating model, and it can provide a key role in validating a bottom up estimate.
In this blog, I will primarily be focusing on providing tips for creating a bottom-up estimating model as this type of estimating model is generally thought to be both the most accurate, and the most difficult to create. Although the bottom-up estimate tends to create the most accurate estimate, it is worthwhile to apply a top-down estimate as a sanity check. This is especially useful during the testing and initial roll-out of a new estimating model.
Before we jump into the steps for creating an OUM estimating model, it is important to establish that this blog focuses on estimating effort (# days or # hours), not duration or price. Both duration of the engagement and the price of the engagement are highly dependent how the engagement is staffed and the cost of each resource, and; therefore, highly dependent on your individual organization.
Join tomorrow’s blog as the steps for developing an OUM Estimating Model are detailed.