Accurate estimation of costs is a critical process in project management. The estimation approaches are used to determine the lengths as well as costs that will be incurred during a project’s lifetime ( Straw, 2015) . Two approaches, top-down and the bottom-up approaches are used to estimate project costs. The two approaches are paramount in assisting the process of decision making, evaluating project viability, measuring performance, creating work schedules as well as understanding resource requirements for a project.
The top-down estimating approach is undertaken by a project’s top management while basing their estimations on the project’s general available information. Additionally, the top management’s estimations are backed by experience as well as expert input. The top-down approach is best suited in situations that pose considerably uncertain conditions coupled with unclear project scope. Furthermore, the approach may be applied where small projects are being explored as well as instances calling for strategic decisions ( Grit & Roel, 2015) . The method of estimating costs can assume varied methods that include consensus where several senior managers’ experience improves estimates accuracy. Additionally, an apportion approach can be employed where individual task costs are calculated as percentages of the overall project costs.
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A bottom-up approach, on the other hand, is undertaken by the individuals who will do the actual work. Unlike the top-down approach, the bottom-up method is implemented by the team members and proves more accurate while estimating the actual duration as well as costs for the project ( Association, 2016) . In comparison to the top-down estimation, the bottom-up requires more time to formulate given that it requires all team members’ input to measure their work consequently developing more project team commitment.
I would prefer a bottom-up estimation approach since it involves all project team members. Furthermore, the fact that the team members do the estimates prevent parametric estimating that has an effect on members feeling that estimates have been imposed on them. Moreover, the bottom-up approach the team members consider all scopes of their work thus generating accurate estimates.
References
Association, I. R. (2016). Project Management: Concepts, Methodologies, Tools, and Applications .
Grit, & Roel. (2015). Project Management: A Practical Approach . Routledge.
Straw, G. (2015). Understanding project management: Skills and insights for successful project delivery .
