Bottom up process of estimating cost

Log in or sign up to add this lesson to a Custom Course. Log in or Sign up. Lance is a construction project manager who needs to change his approach to estimating. He usually does not spend much time estimating, confident in using his experience with similar projects as a reference point. However, the last few projects he has worked on have exceeded the estimates provided, so he has decided it is worth the effort to be more accurate. He decides to try bottom-up estimating.

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Bottom-Up Estimating

Bottom-Up Estimating: Definition, Disadvantage & Examples | pu-autotech.com

Describes it as a budgeting method in which each department within an organization makes a list of things it needs and projects that it plans to embark on. The bottom-up budgeting definition describes it as a budgeting method in which each department within an organization makes a list of things it needs and projects that it plans to embark on, then proceeds to estimate the cost of each individual project. When all projects in all departments are listed, the costs are added together, and the result is the company budget. It is used by many economists, analysts, and managers and relies on the idea that the best way to correctly estimate a large budget is by calculating the individual cost of every necessary component, then adding them all up for the grand total. When forecasting the budget for capital , corporate expenses, or revenue, this form of budgeting implies first calculating the budget figures for the lower hierarchies, then adding them up and therefore estimating the necessary budget numbers for the level immediately above, and so on. A good example of how bottom-up budgeting works is in calculating future sales estimates for a specific period of time. Doing it from the bottom up implies first calculating the individual estimate for each product and component.
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A bottom-up approach to estimating cost elements of REDD+ pilot projects in Tanzania

Note: A real world example of a parametric model is called the learning curve. The learning curve mathematically models the intuitive notion that the more times we do something the faster we will be able to perform the task. Specifically, learning curve theory says that each time we double the number of times we have done something the time it takes to perform the task will decrease in a regular pattern.
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Customers, senior managers and stakeholders all want to know how long it will take to complete a project. These are relatively simple questions, yet the project management field has developed many different techniques to answer these questions. For example, when you define the tasks,. When you look at the various techniques, there are a lot of ways to answer those original two simple questions I pose at the top of this article. The top-down approach to defining project tasks involves starting with the project goal or final deliverable and breaking it down into smaller planning chunks.
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