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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.
I would love to apply the Bottom-up approach as it is the best approach to use because the field coordinators and program officers are always in touch with the reality of prices and may therefore provide most accurate estimates. As for dealing with time constraint using bottom-up, it is expected that a budget process will take time and thus should be initiated well in advance to beat time factor, and also employees hired should be honest enough not to inflate costs.
I believe the parametric cost approach should be used because it appears to be the most reliable way of estimating cost without biase.
@uddinirenonsen ,thanks for expressing your point of view on cost estimation.
@collinskiruhi ,thanks for expressing your point of view on cost estimation.
@JerryNwaokolo21b8 ,thanks for expressing your point of view on cost estimation.
Hi, this is Mozharul Islam . An Independent Consultant and just completed my contract with BRAC as Program Manager Partnership . I attending this course to have an international managerial position in any development organization or starting a consultancy / export business .
If we are going to implement a new project it will not be easy to estimate cost and develop a budget. Which approach we will follow depends on how much time we have for preparing the budget. If we have enough time parametric approach is good but if we have less time and have available manpower at field, bottom-up is fine but if we have constrain of both time and manpower then we have no way to depend on top-down approach. In this case we should validate some of our cost estimation with bottom-up approach and some with parametric approach. Indeed mix approach is fine for having good estimation with less time and manpower but parametric approach is best for accuracy.
Having a strong team collaboration will make the combination of the methods the perfect fit to use, as it will help to eliminate time inefficiencies at any stage of consultations.
To better take advantage of the bottom-up approach it is better to upfront have a team that is made up of individuals with honesty and integrity
As per the comments and replies,
A majority would select bottom-up, however, it is coming out clearly from the replies that the combination of the three methods is the perfect fit in estimating costs
@mozharul21 ,thanks for sharing your insightful point of view about project budgeting with us all.Your response will surely spark more active participation by other learners of this course.
@collinskiruhi ,I agree with you.The idea of combining the three budgeting approaches during the cost estimation process seems like the most efficient way forward.
@collinskiruhi ,the bottom up budgeting approach is only applicable if you're willing to double check with suppliers of goods and services.One of its advantages is that it increases participation of project staff in the cost estimation process,Honesty and integrity are virtues that not every employee will have.
All the approaches to Estimating Cost is good.
I will prefer using Top-down and Paramatric Approach by using the information provided by experts and colleagues to estimate my cost/unit for each activity. I believe the method will work well for me.
@fideliskika ,thanks for expressing your point of view on cost estimation.
For our project the most effective approach was to draw upon elements of the three methods. The top down involves experts/partners and some managers while the bottom up which is realistic you will hopefully find honest people at the grass level and involve them are implementers of the project. But in some cases parametric can also be used as some of the activities may involve some set parameters which are known. Therefore, a combination of all three models serves to provide room for comparison and ultimately lead to a realistic budget.
In my opinion, I'll prefer the use of the parametric approach since it is the most accurate but since its application is limited to certain scenarios and cannot always be applied I'd suggest a combination of the top-down approach and the bottom-up approach (if possible). The top-down in my view here is to help check the seeming dishonesty that comes with most employees when the bottom-up approach is applied. Dishonesty in expenses is a major a set-back to accurate cost estimates especially in developing countries.
@msdigam ,the cost estimation process at your organization is brilliant because every budgeting approach complements each other perfectly.Thanks for expressing your point of view on project budgeting.
@DanOke ,thanks for expressing your point of view on cost estimation.
To me, a combination of the three will suffice - what matters is the sequence. Top-down is the best to begin with because costs can be lumped up based on the total project cost - and these lumpsum estimates will act as a guiding budget during the bottom-up, while applying the parametric where possible.
@bwamubeyi ,thanks for expressing your point of view on cost estimation.
A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values
@cijolig2 ,your definition of cost estimation is on point.Thanks for sharing it with us.I am certain that other learners will appreciate it too.Which budgeting approach(es) would you opt for as a project manager& why?
Generation cost comprises the overall costs during the whole lifetime, both initial cost and running cost, divided by the total generated power.
Generation cost comprises the overall costs during the whole lifetime, both initial cost and running cost, divided by the total generated power.
@gcijoli243 ,your point of view on cost estimation is highly appreciated.
The three project approaches are to be implemented accordingly,
Top down; coming up with the cost estimates the advantage of the project to the beneficiaries.
Bottom up; The individual who are spending money will create the estimates cost for the implementation of the project, that be a time consumer and not easy to estimate. this approaches can produced more realistic cost estimates.
Parametric: This is an approach that work when you have a knowledge of what suppose to be done, before the implementation of the activities.
@chuoljohn ,thanks for your insightful point of view on cost estimation.