5 Steps to Bottom-Up Estimating

Posted by Gabrielle Guerrera on Thu, Aug 12, 2010

bottom-up estimatingIn the last article on project estimating, we went into detail about two of three popular methods for project estimating: completing a high-level feasibility analysis and top-down estimating. The third approach we introduced was bottom-up estimating. Out of the three estimation methods, this way is the most time-consuming but is also the most accurate. And, while it may not be appropriate for the sort of high-level estimates that are required in a project’s charter or initiation phases, it is invaluable during the planning phases as you develop your estimate of total project cost and a detailed project plan of all project tasks from kickoff to go-live.

These five steps will send you on your way to successful bottom-up estimating:

  1. Identify All Project Required Tasks
  2. Estimate All Tasks Identified in Your WBS or Project Activity Definition
  3. Identify Task Dependencies
  4. Identify the Resources Required to Complete All Tasks
  5. Determine When Resources Should Complete These Tasks

Does step 1 – identify all project required tasks – sound familiar to you? What critical project management standard does it remind you of? If you guessed WBS, you’re right! The basis for bottom-up estimating is the all-important work breakdown structure. Because the WBS is a “breakdown” of all required project work, each decomposed project task is smaller, more manageable, and can be used to easily estimate the costs and duration of work. In fact, the PMBOK, 3rd edition describes the WBS as a critical input to project and program schedules and project organization overall. (For more information on how to create a WBS, check out the Project Standard for Work Breakdown Structures, also published by PMI – great resource!)

So now that we know what we need to get started with bottom-up estimating, 2 and 3 are the next logical steps – estimate tasks and identify their dependencies. Recall from the last article my insistence on the notion that, as project manager, you don’t have to be intimately familiar with the technology or processes being delivered in order to estimate effort required for work. That’s what your technical and business subject matter experts are there for. The process of creating a solid WBS and producing estimates from it is a perfect time to solicit input from all team members and stakeholders to ensure

a) their buy-in to the work required, and
b) to provide a firm reference point for future change management.

In other words, there will be fewer occurrences of requests for a change in scope and work if everyone is clear on the work required upfront.

The last steps, determining the resources needed and when those resources will be able to complete tasks, are also needed to put an accurate schedule together. When considering resources, think about the number and type (experience and skill level) of people needed, equipment (hardware, software, etc.), as well as supplies. As was the case with steps 2 and 3, don’t be afraid to consult an expert on resource-related requirements -- possibly a project or program manager who has lead a similar project, or even your PMO team.

Once you’ve completed estimation of lower-level work packages in your WBS, identified resource requirements, and documented task dependencies, the one thing left to do is aggregate your estimates into totals for each deliverable. This bottom-up estimation process – identifying the work required for lower-level activities and summing them to approximate the work required for higher-level deliverables – is a great way to get more accurate scheduling figures for larger work packages.

Decomposing these work packages gives a greater level of confidence for your project plan and has a slew of benefits in the long run: project buy-in, less chance of budget overruns and scope creep, and more control over your project, just to name a few.

What is your experience with bottom-up estimating? Do you find it to be the most effective method of project estimation? Please share your thoughts and comments.

Topics: Project Planning, Project Estimating