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 employees, vendors and other project team members. They work with you, the project manager, to develop estimates for tasks in the work breakdown structure (WBS). Setting the estimates of the amount of work, duration and cost at the task level lets you combine them into estimates of higher-level deliverables and the project as a whole.
Bottom-up estimating is the most accurate approach to estimating the cost and duration of project tasks. It also requires the most time. This estimating technique gives the entire project team 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 other types of estimates (like parametric and analogous). The drawback of the bottom-up approach, however, is that it takes more time than other estimating techniques. A second issue is that you must wait until you know who will be on your team before you can do the bottom-up estimating.
In this video, Dick Billows, PMP, discusses how to make accurate estimates for small to medium size projects.
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 its cost and duration as well as the risks that affect the task.
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 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(s). 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 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 cost and duration estimates. 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.
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