Bottom-up Estimating – Video

Dick Billows, PMP
Dick Billows, PMP
CEO 4pm.com
Dick’s Books on Amazon

Bottom-up estimating is a project management technique in which the people who are going to do the work take part in the estimating process. Typically those people are the project team members. They work with you, the project manager, to develop estimates at the task level in the work breakdown structure (WBS). When you set the estimates of the amount of work, duration and cost at the task level, you can add them up into estimates of higher-level deliverables and the project as a whole.

Bottom-up estimating is the most accurate approach to estimating cost and duration. It also requires the most time. This kind of estimating involves the entire project team and gives them the opportunity to take part in developing the estimates used to measure their work. As a result, bottom up estimating tends to develop a higher level of project team commitment than parametric estimating. In parametric estimating where the numbers come from an outside source, like published rates, the team members may feel you have imposed the estimates on them. The drawback of the bottom-up approach, however, is that it takes more time than other estimating techniques.

In this video, Dick Billows, PMP, discusses how to make accurate estimates for small to medium projects.

Making Accurate Estimates of Time and Cost

    Bottom-up Estimating: Working Your Way Up

    In bottom-up estimating, you follow a three-step process, working from the lowest level of detail in the work breakdown structure (WBS). You begin bottom-up estimating by developing a detailed work package to go with the WBS. In the work package, you detail the scope and major deliverable that each team member will produce.  You describe the risks that affect the task and its cost and duration.

    This work package is like a contract between you and the team member for their task. You need this contract to make the bottom-up estimating process work effectively with as little padding of the estimates as possible. Team members pad their estimates because they’re concerned about the scope of their work expanding after they have started, without any adjustment to the estimates. They foresee finishing late on the expanded scope and being blamed for missing their commitment. A similar result can happen when external events affect their ability to get the task done within the estimated timeframe. Because of these factors, work packages are an effective tool for clearly explaining to the team member that any changes to the work package are going to reopen the estimating process. In that sense, it gives them protection from scope changes on their task. That is why the work package documents the deliverables, the risks and the approach to the task. You record the team member’s estimates and you both sign the document.  This removes a lot of the anxiety from many team members who have previously been burned by the estimating process.

    Bottom-up Estimating From the Work Package

    Once the work package is complete and the team member is comfortable with it, you can go on to develop the actual cost and duration estimate. In bottom-up estimating, you must be careful not to force an estimate on the project team members. If you force the estimate on the team member, you cannot expect to earn much commitment from them. That commitment is dependent on a free and open negotiation where the team member feels the estimate is fair and reasonable. You may use the team member’s pessimistic, optimistic and best guess estimates developed in the 3-point estimating process. That technique allows the estimates to show the task’s uncertainty.

    Alternatively, you can use an analogous estimating technique with the team member. You will look at the actual amount of work that similar tasks required on completed projects. If you have several projects and tasks to draw information from, you can quickly reach a consensus on how the current task compares to the other tasks. Then you can adjust the estimated work number to show that difference. The team member needs to actively participate in this discussion and in determining the work number that you will use.

    Last, you aggregate the estimates for each activity in the lowest level of the WBS and roll the numbers up to develop estimates for the major deliverables and the project as a whole.

    You can use a number of mathematical techniques with bottom-up estimating. The most popular and most accurate is  3-point estimating where each team member provides their pessimistic, optimistic and best guess estimates for the calculations. Which is the best Estimation Technique?

    To learn more about how to do bottom-up estimating, consider our online project management courses. You work privately with an expert project manager. You control the schedule and pace and have as many phone calls and live video conferences as you wish.  Take a look at the courses in your specialty.

    Subscribe to Our Weekly Project Videos and Technique Articles

    Get Our Free Project Manager Newsletter
    A Free Project Article & Video Each week


    By submitting this form, you are consenting to receive marketing emails from: 4PM.com, 3547 South Ivanhoe Street, Denver, CO, 80237, http://4pm.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

    Related Post

    Author: Dick Billows, PMP

    Dick has more than 25 years of project and program management experience throughout the US and overseas. Dick was a partner in the 4th largest professional firm and a VP in a Fortune 200 company. He trained and developed 100's of project managers using his methodology. Dick is the author of 14 books, over 300 articles and director/producer of 60 short project management videos. He and a team of 25 project managers work with client companies & students across the US and in Europe, South America, Asia and the Middle East. They have assisted over 300 organizations in improving their project performance. Books by Dick Billows are on Amazon.com

    One thought on “Bottom-up Estimating – Video”

    Comments are closed.