Bottom-Up Estimating in Project Management

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Dec 13, 2022

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Bottom-Up estimating is a project planning approach that starts with individual tasks. The purpose of Bottom-Up estimating is to get a more precise estimate of the total project cost, compared with other methods.

Trying to make the most precise project forecast ever? Bottom-up estimation is the way to go.

By adding up the estimates of the tasks in the Work Breakdown Structure's lower levels, a project manager can get a good idea of how long the project will take and how much it will cost (WBS). This article will explain what Bottom-Up estimating is, the benefits and drawbacks of Bottom-Up estimating, and how it compares to the more traditional "top-down" estimating method.

Learn more about this powerful strategy and the tool you can use to perfect it.

Bottom-Up Estimation: What Is It and Why Do We Need It?

To get a better idea of how much a project will cost and how long it will take to complete, Bottom-Up estimating can be used. It achieves its goals by compiling exhaustive information about a project at every granular level. Because it allows managers to examine all of the available elements of the project before it ever begins, it delivers a better, more accurate prediction than other project planning methods.

Bottom-Up estimating: Is It Better Than the Alternatives?

Bottom-Up estimating is preferred above other approaches because it takes into account all of the factors that control the project requirements.

Having a complete picture of a project before beginning helps you decide:

  • Situations where bottlenecks could occur (also how to expel them before they occur)
  • Overcoming insufficient project resources
  • Explain the strategic steps your group will take to complete this project

This works best at the outset of a brand-new, one-of-a-kind project for which there is no data from the past to use.

Bottom-Up estimating: Advantages and Disadvantages

The advantages of Bottom-Up estimating include:

Very precise: Defining the scope of a project is difficult since it requires determining how much time, money, and personnel will be needed to complete the work. By breaking down a project into its constituent parts, Bottom-Up estimating help teams save time and effort while getting an accurate picture of the full scope of a project.

It's a time-saver: By giving an estimate of the work ahead of time, a manager can make improvements in the quality of decision-making and avoid mistakes that cost a lot of money. As a bonus, it prevents future surprises. Even though the method takes a lot of time at the start, the idea is that it will save time in the long run.

Lowers risk: A bottom-up estimate lets the manager deal with problems that come up with the estimates without having to make big changes. This keeps the team from making mistakes that are too big to fix.

Helps get better results: A bottom-up analysis also lets managers come up with plans to help the team do a better job of completing the project. A thorough bottom-up analysis also lets the manager find potential problems before they happen. This helps the team deal with problems better when they do happen.

Increases output: Each team member has some freedom and control over the team, which helps them work well together.

Bottom-Up estimating disadvantages include:

Cannot be scaled up: Bottom-up methods require project managers to begin each new endeavour from square one. There are methods to learn from previous projects that were comparable to the new project. However, bottom-up estimation's purpose is to predict based on the various components of a given task.

Taking up a lot of time: The planning work for a project is done first. Gathering all the needed information can take days or even months. This may not be the best choice for teams that get a lot of projects or have problems with staffing.

At a snail's pace: Given the time it takes to complete a bottoms-up estimate, it is not suitable for urgent or time-sensitive tasks.

Top-down Estimating VS Bottom-Up Estimating

A top -down estimating is way far different from a Bottom-Up estimating. In top-down estimating, the project is estimated based on the work that has been done on the same or similar projects in the past.

Bottom-Up estimation works best for new work or projects that the team has never worked on before. On the other hand, top-down estimation, works best for identical projects, assignments that keep coming up, or work that is required to be done as soon as possible.

With top-down estimating, it's also way easier to use templates from previous project plans than with Bottom-Up estimating.

How To Estimate Projects Better by Doing Bottom-Up Estimation

Bottom-Up estimating, in its most basic version, considers the time and money needed to complete each activity in the project.

Say, for example, that you own a cake shop. The last time you gave a price for a two-tier birthday cake and a few dozen cupcakes, you guessed too low and lost money on the job. Now, you want to figure out how to better estimate a new order, so you don't make the same mistake again.

In this case, you would set out the different parts that each baked good needs. Everything is taken into account, from the amount of frosting to the hairnets. You'll also have to think about the time it takes to shop, handle customer service, and more.

If you put all of these things on one list, you'll be able to see the whole scope of the project and give a more accurate estimate this time.

Wrapping Up

Bottom-Up estimating is more in-depth than other methods of project planning, and can be a better way to predict costs in the long term. The project manager will be able to see if the estimated cost of a task is worth its value before it happens. Because Bottom-Up estimating gives you information about your total project at every granular level, its value ends up being greater than other methods of project management.

If someone is looking to pursue a project management professional from a reputed institute, enrol at StarAgile’s pmp certification. The certification is provided by expert trainers.


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