Top-Down & Bottom-Up Estimates Comparison

last edited by: Pang DX on Dec 6, 2018 7:36 AM login/register to edit this page

Contents
1 Top-Down
2 Bottom-Up
3 Summarized Comparison

Top-Down

The Top-down approach is practical for the initial stage of strategic decision-making and in situations where the information required to develop accurate duration and costs estimates is not available in the initial phase of the project. Hence, top-down estimates are used initially until the tasks in WBS are defined clearly, which enable the development of well-defined schedules and budget.

Delphi (Consensus) Method: Uses the pooled experiences of senior and/or middle managers to discuss thoroughly and ultimately reach an agreement of best estimate of the total project duration and costs in the initial stage.

Apportionment (analogous) technique: Uses good historical data of past projects that are relatively standard with minor variation or customization as a reference to allocate duration and costs to the current project. Refer to Apportionment Method.

Bottom-Up

The Bottom-up approach is typically more reliable and preferred for estimating because it assesses each work package from the bottom, working up to a deliverable and phase. It is practical to use when project schedules and budget from previous similar projects are available for reference. Estimating duration and costs for each work package facilitates the development of schedules and a time-phased budget, which are required to monitor and control the project as it progresses.

Template Method: The schedules and budget from past projects of similar starts but with different endings can be used as a starting point for the new project. For example, an engineering services company has different sets of standard templates for different equipment repair and site maintenance projects. These templates are used as starting points for estimating the duration and costs of new projects which are similar. Though similar in technical specifications, the equipment of the new project may require to be more sophisticated in performances. Hence, the differences in resources required are defined, and times and costs are adjusted accordingly. Storing of such templates in the company’s database enables the project manager and members to develop potential schedules and budgets of optimal accuracy in a short time frame.

Parametric technique: Uses arithmetic means based on historical data and project parameters that are similar as the current project to calculate its duration and costs. This technique is typically used when the environment is stable. Refer to Parametric Cost and Duration Estimation.

Summarized Comparison

Whether top-down or bottom-up, good historical data is needed. Below is a summarized comparison of the two approaches.

Top-Down Estimates:

  • Feasible for overview estimates
  • Tasks are not defined clearly
  • Volatile environment, not viable to develop well-defined schedules & budget
  • Less reliable duration & costs estimates
Bottom-Up Estimates:
  • Feasible for detailed estimates
  • Tasks are defined clearly
  • Stable environment, viable to develop well-defined schedules & budget
  • More reliable duration & costs estimates
-Reference-

Erik W.Larson & Clifford F.Gray (2014: 135-39): Project Management: The Managerial Process, 6th Edition, New York: McGraw-Hill.


last edited by: Pang DX on Dec 6, 2018 7:36 AM login/register to edit this page


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