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Method 1: Analogous Estimate of Effort or Cost

Method 1, 2, and 3 are used early in the project to estimate costs. Method 1 is an analogous estimate that compares the current project to a previous similar project. Method 2 is a parametric estimate that uses predefined parameters like cost per item. Method 3 is a three point estimate that calculates an expected cost based on optimistic, pessimistic, and likely estimates. The document provides examples of each method applied to estimating costs for developing an application.

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Raghav Munna
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78 views1 page

Method 1: Analogous Estimate of Effort or Cost

Method 1, 2, and 3 are used early in the project to estimate costs. Method 1 is an analogous estimate that compares the current project to a previous similar project. Method 2 is a parametric estimate that uses predefined parameters like cost per item. Method 3 is a three point estimate that calculates an expected cost based on optimistic, pessimistic, and likely estimates. The document provides examples of each method applied to estimating costs for developing an application.

Uploaded by

Raghav Munna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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2.1.

COST ESTIMATION

Methods 1, 2 and 3 are used early on. Even the scope statement will require some cost or effort
estimates. Considering more than one method is desirable.

Method 1: ANALOGOUS ESTIMATE OF EFFORT OR COST

Used for Early Estimate or Individual Activity Estimate

Previous Similar Previous Multiplier defining Current Project Estimate


Project Project Effort complexity of
(Column 2) current project (Column 2 * Column 3)
(Column 3)
The project manager ₹5,00,000party 2 Previous Project Effort *
managed to develop cost complexity
an application for = 5,00,000 * 2
sellers and buyers ₹10,00,000
Note: Effort is Size of effort and unit of estimation is Work-Hours or Work-Days and Work-Months.

Method 2: PARAMETRIC METHOD

Parametric Estimate
Unit of Measure Size of Current Project Parametric Project Estimate
(Metric = cost per student) (number of students) (Column 1 * Column 2)
Column 1 Column 2
From the Program More than 1000 1000 * ₹1000= ₹10,00,000
Developer the following
estimates were obtained
for costs per buyer - ₹1000

Method 3: THREE POINT METHOD

Three Point Estimation


WBS Item Pessimistic Estimate Likely Optimistic Expected
(Longest duration- Estimate Estimate Duration
1% probability) (98% probability) (Fastest duration
-1% probability) (P + 4L +0)/6
Overall costs ₹2,00,000 ₹5,00,000 ₹8,00,000 ₹5,00,000
for the project
Optional: Add the following budget for greater confidence.

Add One Standard Deviation to Mean: (P – O) / 6 (68% confidence) = 600000/6 = +/-


₹1,00,000

Add Two Standard Deviations to Mean: 2 * (P – O) / 6 (95% confidence) = +/- ₹2,00,000

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