Estimate Characteristics
The following chart illustrates the characteristics of the types of estimates and the various methods of estimating.
Type | Accuracy | Use | Methods |
---|---|---|---|
Order of Magnitude | -25% / +75% | Initial Concept entry | Analogy / Comparison Parametric Expert judgement Top-down |
Budget | -10% / +25% | Concept DCP, CRM-RFI, preliminary response to RFP | Analogy / Comparison Parametric Expert judgement |
Definitive | -5% / +10% | Plan DCP CRM-Proposal | Analogy / Comparison Parametric Expert judgement Bottom-Up |
Key points to remember about estimate characteristics are:
Order of magnitude is a top-down estimate. It is used during the formation of the project for initial evaluation and during the IPD concept phase. It is also called concept, preliminary, or feasibility estimate. Order of magnitude should provide estimating accuracy of minus 25% to plus 75%. It usually errs on the plus side.
Budget is a more detailed analysis. It is a mixture of firm and unit costs for labor, materials, and equipment. Budget is developed from more detailed project analyses and is used in the concept Decision Checkpoint (DCP). Budget is also called the design, control, or appropriation estimate. Budget should provide estimating accuracy of minus 10% to plus 25%.
Definitive is a detailed, bottom-up estimate used for proposals and evaluations. It is prepared from well-defined data and specifications, and is used in the IPD plan and DCP exit phases. Definitive should provide an estimating accuracy of minus 5% to plus 10%.
DCPs are structured project reviews with specific entry and exit criteria, used to measure the progress of a project.