Analogous estimating uses the actual data from a previous project as the basis for estimating the current project. For example, the previous fence cost $75/foot therefore this one should cost about $100/foot. Many different variables can be compared, such as: scope cost budget duration Measures of scale: Size, weight, length, etc. Work units: … [Read more...]
Estimating the Project
In 1986, the NASA Space Shuttle Challenger exploded spectacularly upon take-off in front of one of the largest live TV audiences in history (to that time). The investigation concluded that several tiny O-rings that sealed the rocket booster to the fuel supply failed. These O-rings were about 1 foot in diameter. Just like the tiny O-rings were able to bring down the … [Read more...]
Project Management Tools of the Trade
Carpenters have hammers, plumbers have wrenches, and programmers have computers. But does a project manager have any tools which help them perform their work better, quicker, or cheaper? Absolutely! In fact, if you don't use these tools you will be at a serious disadvantage to other project managers. And if you do, your career will see an order of … [Read more...]
The Components of a Feasibility Study
A project feasibility study is a report that investigates the viability of a project. It seeks to provide its stakeholders with an analysis that results in a go/no-go decision. Feasibility studies are performed in a variety of industries. They are prominent in the oil & gas, mining, or renewable energy industries, or manufacturing industry for new plant … [Read more...]
Valuation Using Discounted Cash Flow
Discounted cash flow is an project investment valuation method whereby future cash flows are discounted by a rate that accounts for the time value of money. It is used to make decisions between various available projects, or to determine the economic feasibility of a project. For example, when a business is expecting revenue of $250,000 next year, the current … [Read more...]
How to Use the Payback Period
Payback period is the length of time required for an investment to recover its capital. It is the amount of time required until the investment is in a break even position. It is generally used for investments that involve a large up front capital outlay, such as the construction of an industrial facility, or development of a software product. The shorter the … [Read more...]
Guide to Project Resource Management
One of the most important jobs of the project manager is that of project resource management. Like a carpenter using a saw, like a pilot landing an airplane, like a programmer writing code, ask any project manager and they will tell you that managing the project resources is the day to day work they spend most of their time on. Project resources include everything … [Read more...]
How to Produce a Detailed Estimate
Estimating a project is one of the most important aspects of project management. Projects are by definition temporary endeavors with a defined beginning and end, hence stakeholders need to know how much expenditure they are committing to. Thus, project estimates tend to start before the project even begins and are usually updated throughout the project life … [Read more...]
The Rough Order of Magnitude Estimate
Project estimating is one of the most important aspects of project management. By their very nature, projects have fixed budgets and their owners want to know how much they will cost. Hence, project estimating begins prior to project initiation and estimates are usually updated at important project milestones. A Rough Order of Magnitude estimate, often … [Read more...]
11 Types of Estimates
Almost every project requires an estimate. Since a project is, by definition, temporary, somebody must approve a budget for it. Which means they must know how much to approve. The available types of estimates can be categorized into the following groups: Accuracy Source of Data Estimating techniques Accuracy In many industries, project estimates … [Read more...]