Cost estimation


Expert judgment

Cost estimates are provided by experts

Analogous estimation

Estimates are derived by comparing with past similar activities.

Parametric estimation

You go by averages or indexes. Example Cost / Square feet

Bottom up estimation

Detailed estimates are prepared at the work package levels and then they are rolled up to the next higher levels

Three point estimation

A single point estimate is arrived at from three estimates;

cM – Most likely cost

cO – Optimistic cost

cP – Pessimistic cost

Triangular Distribution

Expected Cost (cE) = (cM + cO + cP)/3

Beta distribution

Expected Cost (cE) = (cO + 4xcM + cP)/6