Time and Cost Estimating, Essay Example

Estimations are an important part of business preparations and operations due to the need for the forecasting of related situations. This approach is necessary because there is a constant balance that needs to be maintained between the achievement of stakeholder expectations and control over the ongoing production processes. Most industries are too unpredictable to rely on a brief observation of current raw data for the approximation of both time and cost restraints. Accordingly, several strategies have developed over time to offer an organized and calculated perspective on these variables.

One of the most basic categorical divisions between time and cost estimate systems is the identification of the process as being either top-down or bottom-up (Gray & Larson, 2011). The former begins with the outcome and is arranged to identify the contribution of specific factors like time and cost considerations, while bottom-up analyses begin with the components and work up to an examination of the overall process. These approaches allow for the consideration of differing perspectives when examining aspects of the workflow for purposes like the estimation and/or evaluation of cost and time allowances. Approximations made possible by these processes are necessary to support decisions, set schedules, and for the assessment of project progression.

Time and cost estimations require the consideration of a variety of project-specific factors including the duration, the nature of participating people, organizational culture, project structure, and the need to pad estimates for safety. Quality issues can easily arise when these or other important variables are not given the appropriate amount or effort of attention. There are several guidelines that can help to support the validity of estimations, like having multiple people familiar with each task participate in the part of the process that is associated with their experience. The use of average values for estimate purposes is better than extremes because they best reflect the most likely scenario, each section should be treated independently, and it is vital to maintain consistent units of measurement during time-focused calculations. The addition of risk assessments can also be beneficial to prepare stakeholders for potential but unexpected problems that may arise.

Top-down assessments of time and cost estimates are typically conducted by managers who are familiar with the process by results but may not be educated on the situation regarding the various component methods that contribute to these final observations. The bottom-up approach allows for the packaging of several component evaluations/estimates to be delivered at the higher project levels and provides information from those who are directly involved in the assessed areas of the system. Each direction of estimating has benefits and disadvantages that can make them weak individually, but together they can provide a comprehensive picture of the issues that affect time and resource costs. Accordingly, both views are commonly employed in the estimation processes of full projects.

The preferred method of estimation of time and cost allowances begins with the completion of a top-down overview by higher-level participants. Some tools that can be part of top-down analyses are consensus methods, utilizing ratios, and the consideration of learning curve influences. Organizational and work breakdown structures are designed following the initial estimations to identify the expected frameworks of task assignments and managerial hierarchies. These evaluations are immediately followed by the performance of bottom-up assessment procedures, which may also include templates like the top-down analysis but also relies on the use of parametric indicators along with the completion of WBS packages. The completed integration of both top and bottom originating estimations should be comprehensive but not overwhelming in detail and must leave room for refinements as needed.

Reference

Gray, C. F., & Larson, E. W. (2011). Project management: The managerial process (5th ed.). New York, NY: McGraw-Hill/Irwin.