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.