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The combination of top-down and bottom down approaches is better where there is no option to count the materials to calculate parametric method.

A budget estimate is a forecast of the capital needed for the project activities or a program. A budget is the maximum amount of money an organization or an individual is willing to spend on a project. It is a more detailed and specific financial plan for the project.

Both approach are best and applicable depends to where/when and kind of project tended. Though the best aproach which can be technically and incredible is parametric approach. This is because of the use of cost per unit which is reliable calculated realistic cost. You may multiply the cost per unit times the given number which is transparency approach to all hence no doubt to who is well understood the approach.

Budget estimation is the process of estimating what costs will be incurred during a given period of time, and how much money will be needed to cover those costs. It is often used in business to make informed decisions about where to allocate resources.

I agree with what the module said to be a good approach to estimating costs: use a combination of 2 or 3 of the approaches: top-down for a quick and efficient estimation, bottom-up for a realistic estimation, use both to validate each other, then use the parametric method if large quantities or bulk supplies and resources are involved.

The most effective way to generate cost estimates is the Bottom-up approach because it is closer to reality and will avoid budgetary gaps or errors.

I believe in efficiency. That means, the best is to critically analyse the projects packages and align the approach for budgeting.

I believe in efficiency. That means, the best is to critically analyse the projects packages and align the approach for budgeting.

I believe that you should use the bottom-up approach whenever possible because it provides a more detailed and accurate cost estimate. The bottom-up approach involves breaking down the project into smaller components or work packages and estimating the cost of each individual element. These estimates are then aggregated to determine the overall project cost.

There are several reasons why the bottom-up approach is effective:

1. Granularity: By breaking down the project into smaller components, the bottom-up approach allows for a more detailed analysis of the work involved. This enables a more accurate assessment of the resources, time, and costs required for each specific task.

2. Accuracy: Since the bottom-up approach involves estimating individual components, it allows for a more precise evaluation of costs. Each work package can be evaluated based on its unique requirements, considering factors such as labor, materials, equipment, and any associated overhead costs.

3. Transparency: The bottom-up approach provides transparency in cost estimation. Project stakeholders can clearly see how the overall cost is derived from the individual estimates. This transparency helps build trust and facilitates effective communication and decision-making.

4. Flexibility: The bottom-up approach allows for flexibility in adjusting the estimates as the project progresses. If there are changes to the scope or requirements, it is easier to modify the cost estimates at the individual work package level, ensuring that the estimates remain accurate and up to date.

5. Risk Management: The bottom-up approach helps in identifying and managing project risks. By estimating costs at a granular level, potential cost drivers and areas of risk can be identified more easily. This enables proactive risk management and the allocation of appropriate contingencies.

While the bottom-up approach may require more time and effort initially due to the detailed analysis involved, it is a valuable method for generating accurate cost estimates. However, it's important to note that the choice of approach may also depend on the project's size, complexity, and available data. In some cases, a combination of approaches or the use of parametric estimates based on historical data may be appropriate.

I believe you should use BOTTOM UP approach as you will have the direct knowledge of what you need and cost of all the goods by yourself

I think you have to use the approach that best suits the situation you're dealing with. When it comes to budgeting, not all expenses are of the same nature. There are activities for which you can budget for items to be used individually. In this case, parametric planning is best. On the other hand, you may be in a situation where you are unable to use the parametric approach for budgeting your activity. In such a situation, it is advisable to discuss the matter with your superiors and seek expert advice. In this way, the top-down approach is favoured when you do not know unit prices. The bottom-up approach is preferred when the prices of the items you will be using for your business are verifiable on the market. However, the best approach is a combined approach that allows you to achieve a balanced budget. However, the ideal solution, in the light of management experience, would be to draw up a price list with minimum and maximum ranges, based on the various purchases made on previous projects. This would help to reduce corrective action and budgeting errors.

In module 2, in the section on introduction to scheduling, there are five steps: 1. list activities- 2. sequence activities- 3. estimate resources- 4. estimate duration- 5. create schedule. I'd like to point out that, in practice, you can't estimate resources, particularly financial resources, if you haven't yet estimated the duration of the activity. If you're building a school, for example, and you need to use the services of an architect for the construction plan, you can't set the amount you'll have to pay if you haven't worked out how long the design model will take. In the other case, the workers who are going to build the infrastructure will be paid according to how long it will take. This would mean that an exercise would first have to be carried out to determine the duration of the work before estimating the amount. With this in mind, I think that, with the exception of procurement, where the cost estimate does not really take into account the duration, the duration should be estimated before the resources are estimated. Consequently, the scheduling process should be: 1.List activities- 2. Sequence activities- 3.Estimate duration - 4.Estimate resources- 5. Create schedule. Dear participants, I would like to know your opinion on this issue.

I believe you should use the top-dowm approaches where you and other do a reasches and come down with an exti mate cost on the project. This approach will not be overwhalming and you also have other opinion to understand what your project will need and how are you going to spend the money in a more responsible and minimal way. This approch can realy help you plan the budget and time estimate of the projects.

For me parametric approach is the best approach, first because it is not so complex all that is needed is to ensure that you have a true actual cost per unit and then do the multiplication, and this calculation are quite simple, so generally it sure simplifies a seemingly complex activity.

I believe that using a parametric approach is best because it looks at how similar projects were priced in the past and uses those patterns to estimate costs for the current project. It's a practical way to base predictions on historical data, making cost estimates more reliable.

In my opinion, the most effective approach depends on the specific characteristics of the project and the depth of detail required at the time of estimation. For highly detailed and complex projects, the bottom-up approach is indeed more effective, as it provides a comprehensive and accurate breakdown of costs. Nonetheless, for initial project scoping or when detailed data is lacking, the top-down approach may be more suitable to provide a quick estimate.

I strongly believe that parametric method is mostly precise because it depends on the cost per unit, so it will creat an enough space for the finance or cost estimators to widely control the cash flow through entire project. Cost per unit ensure the precise or most likely prrecise flow of money as it break down the cost of each labor, material or equipment accoridng to productivity or quantity, so this will ensure estimating or predicting the exact amount for each resource.

The best way to come up with project budget is to use both of the three methods. Top down as this will involve experts and some managers while the bottom up which is realistic if you find honest people as these 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. So it is best to combine all the three wherever possible to provide a room for comparison and come up with a realistic budget.

In my formal organization in Malawi, within the Engineering and Construction industry, our Environment department employed a bottom-up approach when formulating field activity budgets. This ensured a realistic foundation for the budgeting process. Top managers then reviewed and approved the proposed budgets. In essence, we utilized a combined approach that leveraged the strengths of both bottom-up and top-down methods.

I believe a combination of the bottom-up and top-down approaches is best.
Why? With the bottom-up approach, the estimates of each department or individual can be collated, and then the top-down approach can be taken by the executives and experts. Adjustments and miscellaneous can be made on the basis of the previously accumulated estimates from the individuals spending money.

For me, Top-down with Parametric is the best way because first, I can use the managers and experts experience to build fast budget. Second, the parametric would give me real prices so the budget would be more realistic.

I believe parametric is best. With parametric you are able to know if you'll be getting discounts. I personally don't feel the bottom down is a good option because dishonesty will always come in and most times when there are discounts it is hard for them to say "oh this is the money remaining". So parametric it is for me.

In my perspective combining both top-down and parametric approach is better because in top-down approach experts guide us for those whose cost per unit is unknown and then we use parametric approach for those whose cost per unit is known.

Interesting discussion. In our organization, We use both bottom-up and parametric approaches of estimating costs. As the two shows some transparency.

All the approaches can be used depending on the project manager but the easiest one has to be the parametric method since prices can be researched and incorporated into the budget.

I believe that you should use the parametric approach so that you're able to calculate your costs and specify wether you will go over budget or not so that you're able to move forward with your project without certain financial bottlenecks.

I believe that we should use the bottom up approach because The individuals who will actually be spending the money create cost estimates. This approach can produce more realistic cost estimates than top-down. However, it can be time-consuming and difficult to coordinate, and employees may occasionally be dishonest about their expected expenses.

Nice one

you are right

L'approche paramétrique me semble être la meilleure eu égard à sa fiabilité et de l'absence de complexité dans son usage. Elle nous aide à aller vite dès lors que les couts unitaires sont déterminés.

Parametric is the most effective way though limited as not everything has a known cost hence difficult to apply in some circumstances.

I believe that you should use the bottom up approach whenever possible because it will involve the implementers and can provide the cost expenses based on the situtation on the ground and despite that you will advise to consider parametric approach wherever possible and fter submitting you engage fellow managers to review the budget. In this case all approaches has been used in one or another.

Although I believe that a three-pronged approach to cost estimates is appropriate for most projects, especially those comprising various complex financial considerations, I would say that the parametric estimate approach is most suitable when wanting to replicate the financial conditions of certain projects. This is particularly useful in an organization that has projects that are nearly identical in the types of resources needed, and who has internal data that can inform the parametric estimates.

Overall, parametric estimates are quick to calculate and are accurate, but the other approaches may be more useful for projects that do not have as much historical precedent. The top-down estimate approach is useful for straightforward projects, but would not be as suitable for projects with a lot of potential risks. The bottom-up estimate approach is good when needing to break down costs in individual tasks with precision and detail, but would not be suitable for all aspects of a project given how time-consuming this approach can be.

I believe it best to use both top down approach and bottom up approach. It help to balance your cost estimate with ease.

I believe that you should use all three approaches whenever possible because then you can see which one would work better for your project .

The most effective way to generate cost estimates is through a combination of historical data analysis, expert judgment, and detailed project planning.
Historical Data Analysis: Reviewing similar past projects provides valuable insights into cost patterns, allowing for more accurate estimation based on actual outcomes.
Expert Judgment: Consulting with subject matter experts who have experience in similar projects can offer nuanced perspectives and identify potential cost drivers or risks that might not be apparent otherwise.
Detailed Project Planning: Breaking down the project into smaller tasks and estimating the costs associated with each task helps in creating a comprehensive and accurate cost estimate. This includes considering resources needed, time required, and any external factors that might affect costs.
Contingency Planning: Incorporating a contingency factor to account for unforeseen circumstances or changes in project scope ensures that the estimate remains realistic and adaptable.
Regular Review and Updates: Cost estimates should be revisited and updated throughout the project lifecycle to reflect any changes or new information that may impact costs.

By combining these approaches, organizations can develop cost estimates that are grounded in data, informed by expertise, and adaptable to the dynamic nature of projects, thereby increasing the likelihood of project success within budget constraints.

For me, I will go with parametric because it is not complicated, all you need is yi have or know the unit cost then you will calculate it by the total number required. This is more straight forward for me and easier to work with.

I believe that you should use the Bottom up approach whenever it is possible because it will give you realistic cost estimates only if you have honest workers.

A combination of all of them is the best .....
Generating accurate and reliable cost estimates is crucial for effective project planning and budgeting. Here are some effective ways to generate cost estimates:

Gather historical data: Review past projects similar in scope and complexity to gather data on costs incurred. Historical data can provide valuable insights into the costs of similar activities, helping you establish benchmarks and make informed estimates.

Use bottom-up estimating: Break down the project into smaller work packages or activities and estimate the costs for each individual component. This approach allows for a more granular and accurate estimation by considering the specific requirements, resources, and potential risks associated with each activity.

Seek expert input: Consult with subject matter experts, project team members, or industry professionals who have experience in similar projects. Their expertise can provide valuable insights and help in generating more accurate cost estimates.

Request for proposals (RFPs): If certain project components will be outsourced to external vendors or contractors, issue RFPs to gather cost estimates from multiple prospective service providers. This allows you to compare and select the most cost-effective option based on the proposed scope of work and associated costs.

Use parametric estimating: This estimation technique involves using statistical relationships between historical data and project parameters (such as size, quantity, or complexity) to estimate costs. Parametric models can be developed based on historical data to calculate costs based on specific project characteristics.

Consider inflation and market conditions: Take into account inflation rates and market conditions that may affect the cost of labor, materials, and other resources over the duration of the project. Adjusting for inflation and market fluctuations helps in generating more accurate cost estimates.

Utilize cost estimation software: There are several project management and cost estimation software tools available that can assist in generating cost estimates. These tools often incorporate historical data, industry-specific cost factors, and formulas to provide more accurate and efficient cost estimations.

Conduct sensitivity analysis: Perform sensitivity analysis to assess the impact of potential changes or uncertainties on project costs. Identify key cost drivers and evaluate the potential variation in cost estimates based on different scenarios or assumptions.

Review and refine estimates: Continuously review and refine cost estimates as more information becomes available throughout the project lifecycle. Regularly update estimates based on actual costs incurred, changes in project scope, or any other relevant factors.

Remember, cost estimates are not precise predictions but informed approximations. It's important to document assumptions, track actual costs, and regularly compare them with the estimates to improve the accuracy of future estimates and enhance cost management practices.

In project management, there are several types of budget estimating techniques that can be employed to forecast and allocate costs. Here are some common types of budget estimating under project management:

Analogous Estimating: This technique involves using historical data from similar previous projects as a basis for estimating the costs of the current project. The analogy can be based on parameters such as project size, scope, and complexity. Analogous estimating is quick and useful when there is limited project-specific information available.

Parametric Estimating: Parametric estimating uses statistical relationships between project variables and cost drivers to generate estimates. It involves using historical data and mathematical models to calculate costs based on project parameters. For example, cost per square foot for construction projects or cost per line of code for software development projects.

Bottom-Up Estimating: Bottom-up estimating is a detailed approach that involves estimating the costs of individual project activities or work packages and then aggregating them to determine the overall project budget. This technique requires a thorough breakdown of tasks, resources, and associated costs. While time-consuming, bottom-up estimating tends to be more accurate.

Three-Point Estimating: Three-point estimating incorporates a range of values for each cost estimate, rather than a single point estimate. It takes into account optimistic, pessimistic, and most likely scenarios to consider uncertainties and risks. This technique provides a more probabilistic view of the project costs and can be used to calculate expected values, such as the expected cost or duration.

Reserve Analysis: Reserve analysis involves setting aside contingency reserves to account for uncertainties and risks that may impact the project budget. This technique involves identifying known risks and unknown uncertainties, estimating their potential impact on the project, and allocating reserves accordingly. The goal is to have a buffer to absorb unexpected costs.

Vendor Quotes: For projects that involve procuring goods or services from external vendors, obtaining quotes or proposals from potential vendors is an effective way to estimate costs. Vendor quotes provide specific pricing information for the goods or services to be procured, allowing for more accurate budgeting.

Expert Judgment: Expert judgment involves seeking input from subject matter experts or professionals with relevant experience in similar projects. Their expertise and knowledge can help in estimating costs based on their understanding of the project requirements, industry standards, and best practices.

It's important to note that different estimating techniques may be used in combination, depending on the project's characteristics, available data, and level of accuracy required. Project managers should select the most appropriate techniques based on the project's specific needs and constraints. Regular monitoring and refinement of the budget estimates throughout the project lifecycle are essential to ensure accurate cost management.

Best to use bottom up as this will mostly capture the smallest costs that you can miss when you are doing the other project estimations. types. Parametric works well if you are purchasing materials or resources

I believe the Bottom-up approach is better for me because it builds team trust and promote ownership of the project. This is because each team that contributed will likely want to see the successful implementation of the collective work, thereby, making them own the project as well.

Of the three approaches, the parametric approach seems the best to be implemented because you use real data to estimate your total costs. However, there are instances or activities within a given project that might not possess this cost-per-unit data. In this instance therefore, I believe the second-best alternative would be bottom-up, because you are using real field data from the people involved within the project, leaving other factors constant.

I believe the Parametric is the best approach because, it is an approach that works when you have a cost-per-unit that can be reliably calculated. It is very reliable and easy to use.

I believe using the three approaches would be most effective being that the top down approach however it being not in touch with real cost will provide limit of cost based on their experience and these will reduce cases of dishonesty by over estimation from the bottom up approach.

I believe that the cost estimation accounts for each element required for the project. Collect historical cost data. Gather historical information from other projects you completed earlier.

As a beginner, I'll go for Parametric. I'll describe fully items and their cost (units). By this, I'll know how to navigate through.

I believe that achieving a truly comprehensive project budget requires the integration of multiple approaches, because; each approach, while valuable, carries limitations that can only be addressed by incorporating other approaches.

I think you will always find yourself using more than one approach to estimate the cost. But the bottom up approach would be the best. It will get give you ideas from other people and from those who will actually be using the money. It also prevents complaints from the team members on imposition of a budget that they might not agree with.

The parametric method of budget estimates involves using historical data and statistical techniques to estimate costs based on specific parameters or variables and therefore, it should be the most reliable and efficient method to compute our daily costs.
let's take a look at some of the benefits of this parametric method;
Efficiency: The parametric method streamlines the budget estimation process by utilizing established formulas or algorithms, allowing for quicker calculations compared to other methods.

Accuracy: Leveraging historical data and statistical analysis, parametric estimates can yield precise cost approximations when reflecting past project intricacies accurately.

Consistency: This approach ensures uniformity across projects within an organization, as it relies on consistent models and formulas for estimation.

Early Estimation: Parametric estimation provides the advantage of generating rough cost estimates even in the project's initial stages when detailed information may be lacking, aiding in early decision-making.

Benchmarking: By comparing estimates with industry standards, organizations can identify areas for improvement or cost-saving opportunities.

Risk Assessment: Parametric estimates consider various project parameters, facilitating early identification of potential risks and uncertainties, thereby enabling proactive risk management.

Resource Allocation: Accurate cost estimates derived from parametric methods aid in optimal resource allocation, ensuring efficient utilization within budget constraints.

Decision Support: These estimates provide valuable insights for decision-making processes such as project selection and cost-benefit analysis, enhancing stakeholder understanding of financial implications.

Flexibility: Parametric estimation can be tailored to diverse project types and industries, allowing for customization to meet specific project needs.

Cost Control: Acting as a reference point, parametric estimates enable effective cost monitoring and control throughout the project lifecycle, facilitating timely corrective actions when necessary.

Both approaches are equally useful in different situations. There are certain activities one cannot get their cost parametrically but through top-down or bottom-up approaches.

In my organization, we usually used a mixed of top-down and parametric approaches, because top-down is easier and does not take longer time and extra resources; while parametric is simpler when the price per unit is known.

Bottom-up approach is the best one.
bottom-up estimation is often the best approach. By breaking down the project into smaller components, it allows for a more thorough and precise estimation of costs.

Bottom-up estimation is often the best approach. By breaking down the project into smaller components, it allows for a more thorough and precise estimation of costs.
It is more efficient by combining these three approaches

In my point of view parametric approach is better other than others for estimating cost because it provide more accurate results.

One of domain that use parametric budgeting is construction sector. But you will never find only parametric budjeting. Worker wages may vary from one area to an other. Some parts to be manufactured needs to divide in many activities to be closer to the real price.

Parametric is the best approach as it will provide accurate information and it is simpler

I believe that you should use the Top -Down approach whenever possible because the seniors in the project may have experiance on the project activity and can help us in estimating the costs easily .

In my opinion, the most effective is using all three. Using the parametric first and the as much as possible to try ensure a good proportion of the budget is accurate as possible. Then use a mix of top-down and bottom-up to trial and error budget. I would personally keep answers seperate and then take the average of the predictions to account for both out of tuch and dishonesty from both sides.

I believe the best approach is combining the three approaches where possible

For me Parametric approach is the best way because this method uses statistical relationships between historical project data and project characteristics to estimate costs. It's effective for projects with well-defined parameters and historical data. It offers a balance between speed and accuracy but may require significant effort to develop accurate parametric models.

I believe that whenever possible,you should use a combination of at least two forms of approach to give a budget that yields minimal complications in execution of the project.
A combination of Parametric approach and Bottom-up approach is great. The parametric approach yields estimates which are derived using calculations from existing cost variables and data from past or related projects and applying them to the current project. The bottom-up approach would however complement it, in that the cost estimates would be provided by individuals in "the know" since they are directly involved in expenditure hence cost estimates would be more realistic having factored in changes such as inflation etc.
The parametric approach would also reduce the margin of excesses created by dishonest employees.

Very true