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I agree that when possible a Parametric approach is the best. However, I had the experience of needing to really trust local experts in approximating their own pay rate and the cost of equipment (bottom up). I believe that a combination of doing your homework to make estimates (top down) combined with bottom up and Parametric is usually the best approach,
@KristynZ ,thanks for expressing your brilliant point of view on cost estimation.
There are some approaches that needs to be use for project implementation.
1- Top down Approach, where the project manager will plan the activities of the project and how the budget be allocated for each and every activity.
2- Bottom Approach is where the cost will be allocated per activities that will cost a lot of money, if the manager doesn't take good supervision the budget will be over spent, that will cause budget constrain.
3- Parameter Approach is how the three constraints Design, Scope and Budget will be balance together..
It depends on types of project you are dealing. If you are doing similar type of project, parametric is more suitable In other hand, if you have Top down then you can relate your spending with strategic intent as well.
In an ideal situation, the Bottom-up approach given it is based on experience and research to provide real costs. And it could be backed by existing proforma invoices.
I believe the top down is a good way of generating cost estimates. Despite the fact that it may give cost that is not real, it will allow for flexibility in case there is a change in price of resources.
In my view, one can use a combination of the three approaches to estimate costs. The benefit out of combining Top-down, Bottom-up and parametric approach is that each expense can be estimated using the appropriate way. Doing so , one can mitigate disadvantages of the different approaches and come up with more realistic costs
@SENON ,combining the three budgeting approaches seems like a brilliant idea.Thanks for expressing your point of view on cost estimation.
@AgathaIBU ,thanks for expressing your point of view on cost estimation.
@rkhanal ,thanks for expressing your point of view on cost estimation.
@chuoljohn ,thanks for expressing your point of view on cost estimation.
I believe that you should use the Top down approach whenever possible because with help of managers, experts they will come up with close to reality cost budgets and it will save time. Moreover they will be aware of the project funding which will guide them when they estimate
@ClemenceK ,thanks for highlighting the benefits of using the top down budgeting approach.
In my side, parametric method is the best one because it can give you the real cost but sometimes it can need you to go direct to the market place to determine the market price for your equipment so it can behave like time consume approach but it is more realistic, Also bottom Up is the good method by making assumption of having honest employees in you organization otherwise you will go to suffer the consequence of unrealistic budget
@Daniel_habari ,thanks for expressing your point of view on cost estimation.
You are welcome.
The bottom-up approach to budgeting is the best. Though it is time consuming to get the people doing the work to estimate the cost, it is more reliable because it will give a relatively updated information of the cost. A good cost compensates for the time in getting the budget done. Of what value is a budget if the cost estimates are wrong? To ensure that the costs submitted by the people are correct, it is advisable to get costs from 2-3 people doing the same job, this will be a good check tool.
@kessytonukari ,thanks for expressing your point of view on cost estimation.
Among the three approches to estimating costs, I believe that parametric is profoundly essential in terms of efficiency and transparency.
@Dommenic ,thanks for expressing your point of view with us.
I believe that you should use the parametric approach whenever possible becauseall costs need to arise will have a specific unit price, need to know that specific price then the cost calculation will be more efficient.
@Theu ,thanks for expressing your point of view on cost estimation.
I believe that you should use all 3 approaches during budgeting whenever possible because they complement each other and the weakness of one approach is corrected by the other. I believe that no approach would be comfortably used in isolation.
Good day Dommenic, it is true the parametric approach gives an opportunity for cost per unit to be established making it easy to use but this cannot apply for every expense hence limiting its use in generating cost estimates.
It is true that the bottom up approach produces more realist costs but it can be time consuming and difficult to coordinate and moreso employees can tend to be dishonest about their expenses.
Depending on your project I think you can use Top-down or bottom-up to check assumptions. You could also use parametric which is easy to calculate but this will not apply to every expense so it must be used only when it is practical to use.
For me the parametric approach is better. Firstly because it is simple and quick. Also it yields more quantitative results than the other approaches.
@Blessing89 ,combining the three budgeting approaches seems like a brilliant idea. Thanks for expressing your point of view on cost estimation.
@Blessing89 ,thanks for actively participating in this course discussion forum.
@shadrecksamungu ,thanks for highlighting the advantages of using the parametric budgeting approach in cost estimation.
@Sekai ,thanks for expressing your point of view on cost estimation.
I believe that you should use the Parametric approach whenever possible because it depicts efficiency and transparency and very clear in all stages
@i_hayat_ahmadzai ,thanks for expressing your point of view o cost estimation.
From my point of view "Parametric" approach is the best, with the fact that a clear unit of measurement is attached to what is to be measured. In a situation where units are developed, the estimate will be easier to make. Furthermore, in the case of supplying and installing a particular item, say a roofing sheet. The easiest way to compute is to;
When generating the cost estimates it's always good to start by listing the project activities. The project charter is a good place to start. 3 different approaches can be used to allocate costs:
@michaelmaundu ,thanks for expressing your point of view on cost estimation.
@binbaaz72 ,thank you for expressing your point of view about the parametric budgeting approach.
I believe parametric is most effective because it provides realistic cost from market data to calculate an estimate of the project parameters. It is also a simple approach compared to Top-down and Bottom-up
@EWURAMA ,thanks for expressing your point of view on cost estimation.
I believe that you should use the Top-down approach whenever possible because will help the team members those who are implementing the project to get involve in giving the amount estimated, because they are directly dealing with the tasks, therefor they know the actual amount spending.
The parametric method for me is ideal for estimating activity costs for a project because of its simplicity. what is key is to get an accurate reliable cost per unit and the calculation should be easy once the required number of units is known. The project manager must endeavor to get realistic unit costs in order to ultimately get a realistic budget. This can be achieved by using the top down approach to some extent and then following this up with the bottom up approach to check that the cost per unit is reliable.
For me the Parametric approach has worked as we have been able to get a close to cost budget before hand and then forecast for any unexpected price increases that may come from suppliers.
@Shushenka ,thanks for expressing your point of view on cost estimation.
@Raksmey_Bo ,thanks for expressing your point of view on cost estimation.
I believe on all the three approaches because sometimes, in a new set up, or fresh Project Manager with least experience in budgeting, top bottom approach is much needed for his guidance, support, and mentorship in order to prepare budget plan easily.
Similarly, bottom top approach is also a realistic one, where the lower level cadre can support PM in terms of better estimation, costing, as they are actually engage in field activities, where they can know better the markets prices of commodities etc.
I also support parametric approach, because in some case, a PM has to calculate the estimation/prices per unite then go a head for multiplication.
So being a project manager, all the three approaches are very essential and should be taken in consideration while preparing a budget plan.
I will go with Bottom up approach. As it has:
Better accuracy,
budget estimates from the lowest level,
it helps boost the accuracy
better accountability of the budget
and most importantly Employee motivation
In reality the activities that require costing require to use all the approaches to minimize estimation errors. there fore it will be good if we consider all cost estimation approaches in combination. specially using bottom up approach is more participatory and if there is enough time this approach is best. Actually bottom up approach is usually used in combination to top down approach i.e. the idea is generated at management level and communicated to bottom down. parametric approach should also be considered for activities that fit with it.
i agree with @EleletaSuraf, concerning advantage of parametric estimation, but i do not think all project activities will have standardized unit of measurement
Looking at the three, I will choose parametric because it will give you more realist result during estimating.
I also think that parametric approach is the best approach, first because it is not so complex all you need, is to ensure that you have a true actual cost per unit and then do the multiplication.
@MohammadTahirSafi ,thanks for expressing your brilliant point of view on cost estimation.Combining all the budgeting approaches makes perfect sense.
@Egbe1 ,thanks for expressing your point of view on cost estimation.
@0776741078 ,thanks for expressing your point of view on cost estimation.
@Habt ,I am in agreement with you.Thanks for expressing your point of view on cost estimation.
@ishfaqh12 ,thanks for expressing your point of view on cost estimation.
Bottom-up is the best according to me.
@Solon_freedom ,thanks for expressing your point of view on cost estimation.
The bottom-up approach is very help full in social impact organizations. It allow to set a banch mark for almost all projects. The best way to make sure you have accurate information about the budget design is to request three proforma invoices from three different biders. That will give a clear sight of best prices for the same items
In my opinion, parametric approach is the best because one is critically tackling even the smallest expense to be done in the project.
@Chesnel ,thanks for expressing your point of view on cost estimation.
@Dylan_Nkenuye ,thanks for expressing your point of view on cost estimation.
In my own opinion i will advise one use the parametric method for estimating activity cost, this is because it is very effective in the sense that you can easily know the cost get the cost of an item then multiply the cost by the number of the same items you will be needing for the completion of the project. it even helps to reduce theft amongst workers and give your project a heads-up.
@Makinde ,thanks for expressing your point of view on cost estimation.
I prefer the parametric because I think it will be accurate and specific. With it everything even a pin amount use in the project will be calculated and we will be sure that our project will be realistic
@Sonea2020 ,thanks for expressing your point of view on cost estimation.
From my point of view, the combination of the 3 is better
@orhabi02 ,combining the 3 budgeting approaches seems like a brilliant idea.Thanks for expressing your point of view on cost estimation.
For me, the parametric approach is best. I have used it on a project before now, although at the time, I was clueless about its designation. It was just an effective way I was able to make estimates. So, I believe this approach is the best as it's seemingly more efficient and accurate.
Of the three three budget approaches, I prefer bottom up approach despite some questions about governance, that budget figures may be overstated. But those at the bottom know the realistic cost of an activity.
@Suoghene ,thanks for expressing your point of view on cost estimation.
@Kosulanane ,thanks for expressing your point of view on cost estimation.
I believe in blending the approaches of bottom up approach and Parametric approach. This is because parametric approach ensures that we factor in unit per cost per item that will be used in the project implementation. Equally those that will use the items should be consulted for identification , location and utilization of these Items. It is the end
users that know how much will be required or utilized in a project.
I realise you should use the buttom up approach because it can produce more realist cost estimates than those all!
@polycarpouko ,thanks for expressing your point of view on cost estimation.
@mam_celia ,thanks for expressing your point of view on cost estimation.
parametric approach because it is not complex and it really shows how the budget ,cost of what is intended to be bought costs how much
@chelesanisibanda243 ,thanks for expressing your point of view on cost estimation.
I believe that we should use the bottom- up approach to get a more accurate cost estimate
@TemitopeOlaniyi ,thanks for expressing your point of view on cost estimation.
For me Bottom up and Top down approach is the best because as a project manager you need to do research before you come up with anything. Let say your team member who are the money user gives you their estimates expenses, you need to research further to see if the costs are realistic or not. By doing so you are already involved two approaches.
@janethkarungi2015 ,thanks for expressing your point of view on cost estimation.
In my opinion, the best method to generate cost estimate is the parametric method, it is the most used in construction industry, through unit prices analysis. In fact, some specialist are dedicated to performing these analyzes.
I believe that you should use the parametric approach for when estimating for the procurements aspect of your project, and the bottom-up approach for the service aspect of your project. However, I will advise that a well carried out market price comparison should be done before hand.
I believe the parametric and the bottom-up approaches provided the latter is supervised and counter checked closely
The best approach is applying the three where necessary for addressing different budget requirements.
I agree that it is best to combine the three approaches to estimating project costs. I would say in order of my preference, start with the bottom-up approach as it is more realistic. However, this approach can be biased or influenced negatively by individuals, while the parametric approach is more objective.
@AdenikeAjagunna ,your point of view on cost estimation is brilliant.The use of the three budgeting approaches in a sequential order makes perfect sense.
@Nzukibee ,thanks for expressing your point of view on cost estimation.
@Assertive ,thanks for expressing your point of view on cost estimation.
@Solomontutu ,thanks for sharing your insightful point of view on cost estimation.
@EderBarcenas88 ,thanks for highlighting the benefits of using the parametric budgeting approach in cost estimation.
I believe that you should use the parametric approach for when estimating for the procurements aspect of your project because provide full analyses of items to be purchased. However, it is better to use the bottom-up approach for the services aspect of your project as it will reduce the risk of going under budget during implementation. More so, I will advise that a well carried out market price comparison should be done before hand.
@Solomontutu ,thank you for your insightful point of view on cost estimation.
I believe the bottom up can be used in most situation, you just have to increase the competition, or get estimates from other vendors. It might be time consuming, but it helps a lot.
Well, I prefer to work with all three approaches and more. I expected to see a cost survey as well, but in any case, I can still include it. This is because no single method can completely serve the purpose. As long as we have a good airtight budget that will not go overly overboard am okay.
@LakanseTobi ,thanks for expressing your point of view on cost estimation.
@Moseerilz ,thanks for expressing your point of view on cost estimation.
Frankly speaking, non of the three methods of generating cost estimates is alone perfect.
I would had naturally selected the bottom-up method as best, where those who would actually be spending the monies give a more realistic cost estimate. But sadly, the dishonest nature of people about their actual expenses will militate against this choice.
Conclusively, I would rather combine all three methods of activity cost estimation to create a more realistic and foolproof outcome.