Thursday, April 14, 2011

Blog Number 5

Cost Estimation Tools and Techniques

Analogous or top-down estimates: Use the actual cost of a previous, similar project as the basis for estimating the cost of the current project.

Bottom-Up estimate: Involve estimating individual work items or activities and summing them to get a project.

Parametric modeling: Using project characteristics (parameters) in a mathematical model to estimate project costs.

Computerized tools: Tools, such as speadsheets and project management software, that can make working with different cost estimates and cost estimate tools.


Constructive Cost Model ( COCOMO )

Function points: Technology-independent assessments of the functions involvd in developing a system.

Earned Value Management - STUDY

The planned value (PV), formerly called the budgeted cost of work scheduled (BCWS), also called the budget, is that portion of the approved total cost estimate planning to be spent on an activity during a given period.

Actual Cost (AC), formerly called actual cost of work performed, total direct and indirect costs incurred when accomplishing tasks.

Earning Costs (EC), estimate of physical work actually completed.

Rate of performance (RP) is the rating of actual work completed to the percentage of workk planned to have been completed at any given time during the life of the project or activity.


              Term                                                  Formula
        Earned Value                                     EV = PV to date * RP
        Cost Variance                                    CV = EV - AC
        Schedule Variance                             SV = EV - PV
        Cost Performance Index                    CPI = EV/AC
        Scheduled Performance Index            SPI = EV/PV
        Estimate at Completion                       EAC = BAC/CPI
        Estimated Time to Complete               Original Time Estimate/SPI

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