The document discusses various project estimation techniques including expert judgement, analogous estimation, parametric estimation, three point estimation using triangular and beta distributions, and reserve analysis. Expert judgement relies on expertise to estimate time and costs. Analogous estimation uses historical data from similar past projects. Parametric estimation uses algorithms and historical data and project parameters to calculate estimates. Three point estimation derives an average from optimistic, pessimistic, and most likely estimates. Reserve analysis adds additional estimates to account for uncertainties through buffers for schedule, budget, costs or resources.

1. Project Estimation Techniques
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2. Agenda
• Estimation Techniques
• Reserve Analysis
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3. Estimation Techniques
• These techniques help in estimating
▫ Time
▫ Cost
▫ Resources
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4. Expert Judgement
• Estimation provided by an Expert based upon expertise in an application
area, knowledge area, discipline, industry, etc., as appropriate for the
activity being performed. Such expertise may be provided by any group
or person with specialized education, knowledge, skill, experience, or
training.
• Examples
▫ A software engineer estimates 40 hours work duration for writing a
software program
▫ A painter estimates $1000 for the wall painting work
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5. Analogous Estimation
• A technique for estimating the duration or cost of an activity or a
project using historical data from a similar activity or project.
• It is usually less costly, less time consuming & less accurate.
• Example
▫ A project manager estimates 50 hours work duration for writing a software
program because a similar program had taken 50 hours last month
▫ A painting contractor estimates $1500 for the wall painting work as a
similar work costed $1500 last week.
• For more details refer to -
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https://www.pmbypm.com/analogous-parametric-estimation/

6. Parametric Estimation
• An estimating technique in which an algorithm is used to calculate cost
or duration based on historical data and project parameters.
• It is usually more accurate. The accuracy depends on accuracy of underlying
data and sophistication of calculation model.
• Example
▫ Historical data suggests that 1000 lines of code takes 8 hours to write. So, a
program with 10000 lines of code is estimated to take 80 hours.
▫ Historical data suggests painting 100 sq. ft. of wall costs $100. So, 500 sq.
ft. wall is estimated to cost $500.
• For more details refer to -
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https://www.pmbypm.com/analogous-parametric-estimation/

7. Three Point Estimation
• A technique used to estimate cost or duration by applying an average of
three different estimates – optimistic, pessimistic, and most likely
estimates. It is useful when there is uncertainty with the individual
activity estimates.
• There are two ways to perform Three Point Estimation
▫ Triangular Distribution
▫ Beta Distribution – Program Evaluation & Review Technique (PERT)
• For more details refer to -
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https://www.pmbypm.com/3-point-estimate-is-different-from-pert/

8. Triangular Distribution
• Example
▫ Optimistic Duration – 10 hours
▫ Pessimistic Duration – 80 hours
▫ Most Likely Duration – 30 hours
▫ Expected Duration – (10+80+30)/3 = 40 hours
• For more details refer to -
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https://www.pmbypm.com/three-point-estimate-formulas/

9. Beta Distribution
• Example
▫ Optimistic Duration – 10 hours
▫ Pessimistic Duration – 80 hours
▫ Most Likely Duration – 30 hours
▫ Expected Duration – (10+80+4*30)/6 = 35 hours
• For more details refer to -
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https://www.pmbypm.com/three-point-estimate-formulas/
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10. Agenda
• Estimation Techniques
• Reserve Analysis
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11. Reserve Analysis
• Additional estimates to take care of contingencies to account for project
uncertainties for the schedule duration, budget, estimated cost, or
number of resources.
• Example
▫ Estimated duration is 40 work hours. Additional reserves (buffer) of 8 hours
for technical uncertainties
▫ Estimated cost is $100. Additional contingency reserve of $10 is established
to take care of risks.
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