Basis of Estimates

Posted on April 27, 2009 by

0


This document, Basis of Estimates, is an output of the PMBOK®’s Estimate Costs process. This is a companion document to Activity Cost Estimates, which details how much each project activity is expected to cost. The Basis of Estimates document indicates how these estimates were derived. It could include information such as how the estimate was developed, assumptions, constraints, range of possible values, and confidence in the estimate.

For example, in Katy’s Activity Cost Estimates document, she has the activity of “Shopping for Cookie Ingredients” with the cost estimate of $17. Her Basis of Estimates document first contains how this estimate was developed. It was developed by using expert judgment to estimate the cost of the individual ingredients on the shopping list. The flour is about $4, the sugar $3, the chocolate chips are $3, the vanilla is about $2, the eggs are about $2, and the butter is around $3, which totals the $17 estimate. Next are the assumptions and constraints. She assumes that the chocolate chips that typically cost about $4 will only cost $3 because she has a coupon for one dollar off the price of the chocolate chips. She is constrained by only having $20 to spend. Last is the value range and confidence level. The range of possible values for this activity is from $12 to $20, and she is 75% sure that her estimate of $17 will be accurate.

More on this topic can be found in the earlier postings of Estimate Costs Process (posted March 12, 2009) and of Project Exclusions, Assumptions, and Constraints (posted April 23,2009).