I would like to talk about question no. #6 In order to discuss on every step of the project, the project manager should be estimate the cost seriously. It is important to the project manager to understand what ROM, budgetary, and definitive estimates are.
Rough Order of Magnitude (ROM)
• It provides an estimate of what the cost of the project or ballpark estimate
• Done very early in a project or even before a project starts: 3 – 5 years before project completion
• This type of estimate is done at the early stages of a software development project
• This estimate is used to help decide which projects will be done
• The accuracy is very poor with a variance of -50% to +100%
• If it is an IT project, the cost overruns are much more common so the estimate is often
• This type …show more content…
• This type of estimate takes the least amount of time to create
Budgetary Estimate
• Used to allocate money for the company budget
• Done early for a project: 1 – 2 years before project complete
• The accuracy is better than ROM at a variance of -10% to +25%
• This estimate takes longer to create than the ROM estimate but it is still very quick.
Definitive Estimate
• This is the most accurate estimate of the three types of estimates
• Can be used for purchase decisions such as evaluating supplier proposals and allocating the funds for purchases
• Also known as “bottom-up estimate” (Phillips 2014)
• Usually done one year or less prior to the project completion
• This type of estimate should be done after a WBS (Work Breakdown Structure) has been created for the project
• WBS is a “deliverables-oriented decomposition of the project scope” (Phillips 2014)
• The variance is much smaller than the other two at -5% to +10% accuracy
• This type of estimate takes a lot of time to create and thus it is the most accurate of all
Rough Order of Magnitude (ROM)
• It provides an estimate of what the cost of the project or ballpark estimate
• Done very early in a project or even before a project starts: 3 – 5 years before project completion
• This type of estimate is done at the early stages of a software development project
• This estimate is used to help decide which projects will be done
• The accuracy is very poor with a variance of -50% to +100%
• If it is an IT project, the cost overruns are much more common so the estimate is often
• This type …show more content…
• This type of estimate takes the least amount of time to create
Budgetary Estimate
• Used to allocate money for the company budget
• Done early for a project: 1 – 2 years before project complete
• The accuracy is better than ROM at a variance of -10% to +25%
• This estimate takes longer to create than the ROM estimate but it is still very quick.
Definitive Estimate
• This is the most accurate estimate of the three types of estimates
• Can be used for purchase decisions such as evaluating supplier proposals and allocating the funds for purchases
• Also known as “bottom-up estimate” (Phillips 2014)
• Usually done one year or less prior to the project completion
• This type of estimate should be done after a WBS (Work Breakdown Structure) has been created for the project
• WBS is a “deliverables-oriented decomposition of the project scope” (Phillips 2014)
• The variance is much smaller than the other two at -5% to +10% accuracy
• This type of estimate takes a lot of time to create and thus it is the most accurate of all