This video presents the most common estimation approaches used when building a project budget.
- We stink at estimating.…I hear this all the time.…Are you a project manager that struggles with this?…How can you make this better?…The key is not to paint a picture that…is more detailed than you have facts to support.…To do this,…your estimation should be performed in stages or types.…Let's examine the three predominate types…of project estimate.…The first is the rough order…of magnitude, or ROM, estimate.…
ROMs are built at the project initiation stage…and are usually based on knowledge of similar projects.…They provide an initial cost to determine…if your project is viable.…The rule of thumb with ROM estimates…is that they will come in at…a range of minus 25% to plus 75%.…This means that the actual costs could be 25% less…or 75% higher than your ROM estimate.…For example,…if you're building an airplane that…is 30% larger than the one you built two years ago,…you might take the actual cost of the last aircraft…and add 30% as the ROM estimate for your current project.…
ROM estimates are given based on minimal information…
Note: This course follows the latest guidance from Project Management Institute, Inc., as outlined the PMBOK® 6 Guide.
- Recall best practices for project budgeting and estimation.
- Distinguish common estimation approaches used to build project budgets, and understand when to use them.
- Identify best practices for budget expectation management, while utilizing sound budget refinement techniques.
- Describe and explore agile project budgeting techniques.
- Review various approaches for correcting project budget overruns.
- Review sound budget reporting approaches, including how they can be used to report project status.
- Recognize the issues and changes that can put a project budget in jeopardy.