Elemental Estimate
Refine and expand, if necessary, your RBS and WBS. Resubmit your revised WBS and RBS with this assignment. Highlight, flag, or describe any enhancements.
• With the enhanced RBS, develop an "elemental estimate" the work packages in the WBS o Indicate the name of each resource that is needed, its intensity, its duration, and the effort. The effort is the product of the intensity and the duration.
For example, if you use three interns for four days to build a registration list, then the resource is intern, the intensity is 3, the duration is 4 days, and the effort is 12 worker-days. An equivalent effort for a bulldozer, or for an electronic testing device, might be measured in equipment-days.
o If you find that for some elements you have to use fractions of a resource unit, adjust the unit measure of the resource in your RBS to a smaller unit so that the assigned values in the estimate will be integers and not fractions.
• As a base of reference for scheduling the tournament, the duration of any element is the longest duration of the resources that are required for it.
If some of the resources for a WBS element need to be applied serially, then it is generally more advisable to divide this element into several serial elements. The rule here is, then, that within a given element, resources may be used in parallel, but not serially.
Project Estimating
Project estimating is the process in which the project implementation team will make a logical, and hopefully accurate, prediction of the cost and duration of the individual components of the project, and by extension, the cost and duration of the total project.
Depending on the amount of information that is available at the time that the estimate is being prepared, one of several different methods will be used to develop the estimate. If the available information is sparse, a rough estimating technique might be appropriate, and the accuracy of the resulting estimate will likely be lower.
The most detailed estimate will be prepared when there is enough project information available for the development of a detailed Work Breakdown Structure (WBS), a detailed Resource Breakdown Structure (RBS), and by extension, a bottom-up estimate.
A detailed estimate will not only provide a reasonably accurate forecast of the cost and duration of the project for the client, but it will also provide a logical foundation for the implementation of the inevitable midstream changes to the project.
Reading Assignments
• Integrated Project Planning, Chapter 6, Resource Breakdown Structure
• Integrated Project Planning, Chapter 7, Estimating Models
• Integrated Project Planning, page 118, Pristine Plan
• Files posted with this learning module
Reference Material
• Practice Standard for Estimating, PMI, 2010
• Practical Estimation: A Pocket Guide to Making Dependable Project Schedules, by Bockman, 2015
• Parametric and Conceptual Estimating,by Dysert, Elliott, and Leo, AACE, 2004
• How to Cost and Price Competitive Bids, by J. Taylor, MC, 2000
• NASA Cost Estimating Handbook, NASA HQ, Washington, DC, 2002
NOTE: For the following assignments (6, 7, and 8), you will likely find it very helpful to build the deliverable in Excel. As you will see, the exercises build on one another and will require you to refer back to previous data. Having these assignments built into an Excel document will expedite your work! You can turn in the same Excel document each week with updated information added as a new sheet (where needed), and simply update/expand your narrative.
6 Assignment
Team Assignment 6T - Resource Breakdown Structure (RBS) for the Vandelay Industries golf tournament project. Since your team is responsible for putting together this tournament, you won't be able to simply "hire" a general contractor to do it for you. Therefore, you must determine the resources needed for the project. The purpose of this exercise is not to estimate the project per se; rather, this RBS will act as a "shopping catalog" for the resources.
• Include all the resources your project would need. List the recourses even if there is a very small likelihood that your project will need them (within reason).
• Divide the pool of resources (people, equipment, tools, materials, etc.) into entities specific enough so that you can use this RBS as a "shopping catalog" for assigning resources to activities of the project. Divide your breakdown until the total number of elements at the lowest level is around 20.
• As with the WBS, not all branches need to go to the same level, but the significance of the lowestlevel items in the overall pool should be similar.
• Maintain a reasonable level of consistency in grouping your resources. For example, at the lowest level, group the labor items either by degree, job title, or job function; this grouping should be consistent across all labor items.
• You may include, as a separate (level-one) category, items such as fees, licenses, permits, bonds, insurance premiums, etc. Typically, these are items for which you have to pay, but they do not require any work by the project team.
• Specify the unit of measurement for each resource, and the cost of each unit of measurement. You may list either the bare cost, which is actual direct purchase price, or burdened price, which would include overhead. However, all your costs/prices should be either bare or burdened. Do not mix and match.
• Maintain a reasonable consistency in measurement units. For example, if at all possible, the unit of measurement for all elements that are time-related should be either hours, or days, or months. Be sure to note any inconsistencies in unit of measure in the same category.
• Use the #, #, # notation to highlight the lineage of each resource. Add a prefix of R to all resource numbers (e.g. R1.2.4).
• Present your RBS graphically (Excel provides the easiest method).
Post your assignment to the 6T dropbox.
7 Assignment
Team Assignment 7T - Elemental Estimate
Refine and expand, if necessary, your RBS and WBS. Resubmit your revised WBS and RBS with this assignment. Highlight, flag, or describe any enhancements.
• With the enhanced RBS, develop an "elemental estimate" the work packages in the WBS oIndicate the name of each resource that is needed, its intensity, its duration, and the effort. The effort is the product of the intensity and the duration. For example, if you use three interns for four days to build a registration list, then the resource is intern, the intensity is 3, the duration is 4 days, and the effort is 12 worker-days.
An equivalent effort for a bulldozer, or for an electronic testing device, might be measured in equipment-days. oIf you find that for some elements you have to use fractions of a resource unit, adjust the unit measure of the resource in your RBS to a smaller unit so that the assigned values in the estimate will be integers and not fractions.
• As a base of reference for scheduling the tournament, the duration of any element is the longest duration of the resources that are required for it. If some of the resources for a WBS element need to be applied serially, then it is generally more advisable to divide this element into several serial elements. The rule here is, then, that within a given element, resources may be used in parallel, but not serially.
• You do not have to use all of the resources of your RBS in this estimate, but you cannot use a resource that is not listed in the RBS (in which case you must go back to revising your RBS).
Post your assignment to the 7T dropbox.
8 Assignments
Team Assignment 8T - Bottom-up Estimate
Using the elemental estimate you created in 7T, you will now determine an estimate of the actual costs of the work packages (and through a "roll-up" summation calculation, the overall project). These revised structures, and updated values, help the project team develop the full project estimate.
• Multiply the cost of each resource by its own unit price to determine the cost of each resource for each WBS element.
o Determine the total amount of resources, on a resource-by-resource basis, that would be necessary for all WBS elements at the next-to-the-lowest level. Only the total effort needs to be summarized to the mid-level elements for each resource, and not the intensity. oRepeat the process until you arrive at total resource expenditure, resource by resource, for the project. Remember that each higher-level element requires no new resources, only sums of its lower level elements, which are considered to be the "children" of that specific element.
o Conduct the same roll-up for the cost of each WBS element. Calculate the cost of each WBS element at the lowest level and then roll the costs up, level by level, to arrive at the total cost of the project (add up all the costs for each work package in a WBS deliverable; then add up all the deliverable sums for a total project estimate...this is the "roll-up"). oBased on resource expenditures or cost, calculate a percentage for each of the main deliverables (level-1 items) of the WBS. They should add up to 100 percent.
Remember, in the real world, your sponsor has probably given you a budget for the project (a "top down" budget). Using your bottom up estimate, you as the project team now have an idea as to whether or not you are going to be within the given budget, and can adjust accordingly.
• If you found that the cost was not within budget, the elemental estimates can be fine-tuned to enhance your plans. You would continue fine tuning the estimates of the lowest level items until you obtain what you believe is a reasonable tournament estimate.
o You would NOT change an elemental estimate from what you believe is the correct estimate.
o Additionally, you cannot change the estimated values for the items that are "parents" of lower-level (child) items. The estimate values for these intermediate-level elements result from summing child elements, and not from input.
o If you as the project team believe the elemental estimates cannot be adjusted to meet the budget and still accomplish the project, you need to go back to the sponsor and let them know the budget is not sufficient (this is part of being an ethical project manager).