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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.

Bottom-up estimating: Also called analytical estimating, this is the most accurate estimating technique - if a complete work breakdown structure is available. A work breakdown structure divides project deliverables into a series of work packages (each work package comprised of a series of tasks)

@alialdar467 ,thanks for your insightful point of view on cost estimation.

Yes, I also concur that parametric can be good when all unit costs are available or can easily be sourced.

Interesting discussion here, I would go for the bottom up approach, because it will give realistic cost estimates, yes of course it might be quit time and difficult to coordinate but what is important is that I will come up with a realistic cost estimate for the project. Yes indeed dishonest may come in here and there but that is every set and it is something that can be controlled especially with good measures put in place. With the bottom up approach, the project manager can be assured of achieving the project goals without so any changes to the budget certeris Paribas

@ignitius ,your insightful point of view on cost estimation is highly appreciated.

@AmbassadorAbraham ,thanks for expressing your point of view on cost estimation.

The parametric approach works best for me because the cost-per-unit can be reliably calculate the unit of the item. For example costing units and then Multiplying that cost-per-unit times the number needed, and you have generated a parametric cost estimate.

Inasmuch as parametric is best when one ideally has all the unit costs, it is best to consider integrating all the three approaches. The time to collect unit costs for each activity can be onerous hence inputs from experts and fellow team members can short circuit the process

For purposes of having budget estimates that you confidently believe they will be as close as possible to the real costs to be incurred it is important that you make use of all the three approaches by starting with top-down approach to generate general estimates. This should be followed by bottom-up approach to generate estimates that are close to the real costs as much as possible. Finally, make use of parametric approach to come up with exact estimates where it is possible.

@Bisong ,your point of view on cost estimation is explained concisely.Thanks for sharing your answer with us.

@AmbassadorAbraham ,combining the three budgeting approaches is brilliant.Thank you for sharing your answer with us.

@aondubi ,I agree with the idea of combining the three budgeting approaches during the cost estimation process.Thanks for sharing your answer with us.

I believe the best approach is to combine top-down and bottom-up approaches. This would help have a realistic projection within the means of the donors and implementers. Different specialties in the project will provide actual numbers and costs while the management provides the ceiling. Parametric would be ideal if the market prices are stable.

@Lostone ,wow.Thanks for expressing your point of view on cost estimation.

I believe that one should use all the three approaches where applicable, because like we have learned,top down involves experts, managers and research, it is most likely that real costs are met through these engagements, for parametric it's quite simple and usually accurate costs are met,but where some expenses cannot be applied you use the other 2 approaches, finally where you have honest people bottom up is favourable because usually these people know and come up real costs since they responsibility of spending is theirs.

All three approaches have their benefits. When time and resources allow, I think it would behoove most projects to consider each activity from all cost estimate approaches. Cross-departmental projects, for example, could have activities that only staffers at the executive level have the information needed to accurately estimate a budget AND activities that only mid-level staffers are privy to. Deciding the approach at the activity level will result in the most accurate estimates overall.

PARAMETERIC ESTIMATE

@Lovence ,the idea of combining the three budgeting approaches in the cost estimation process is brilliant.

@Mbgk01 ,thanks for your answer.What do you love about this budgeting approach?

@Tamika_Davis ,thanks for expressing your point of view on cost estimation.I also agree with the idea of combining the three budgeting approaches.

use all the three approaches and tally the results because it helps to get the realistic cost

@17-915 ,the idea of using the three budgeting approaches in a complementary manner is brilliant.Thanks for expressing your point of view on cost estimation.

This so eye opening, I must admit this is helping me think of the slightest details of the project

@jodeyo ,I am glad that you're enjoying your time here.

I believe using the parametric cost estimation will be more realistic than the two. This is because first we know all our project inputs and then for each of the inputs we can easily access the estimated cost and then we multiply the number of each input with the estimated cost. Therefore, we can have a better budget estimation for our project than we get in using the top-down or bottom-up approaches.

For me, Top down and Parametric are preferable approaches to creat a budget, for transparency

The most effective way to generate cost estimates is depending on the type of activities. As stated, top-down will be fast and easy if the manager know the cost estimates from the bottom up and parametric cost. all three approaches is beneficial thus need to be incorporated together in creating and estimating cost.

I believe that you should use the parametric approach whenever possible because it ensures flexibility in quantity re-adjustments

I believe there should be some kind of combination between top-down and bottom-up depending on the project. I often do research on cost by comparing different companies for the same product. However, if that is done in consultation with those actually spending the money, they can give recommendations on best companies to go to for costs and quality.

I believe a combination of the top-down and bottom-up approach for estimating costs should be used to save time and get accurate estimates. I can search on my own for products and deliverables, however if this is done in consultation with those spending the money I can also have feedback on best practices and quality of services.

I believe that you should use all three approaches whenever possible because then you can combinate the results and get the best realistic estimation for your project .

It purely depends on the circumstances. Parametric works best as anyone could use it with the estimate that's already there but at certain situations when the budget cannot be estimated that way then it's better combine top- down and bottom- top approach together wherever necessary and provide a combined result

The method used for generating cost estimates depends on whether it is a new or existing project. For a new project, while the estimates used in the project proposal will serve as a guide, it will be helpful to use the 3 methods(bottom-up, top-down and parametric). This will provide a good foundation for estimating costs in subsequent years, if it a multi-year project, or a guide for estimating costs for future projects. For existing projects, key cost items can be tested using the 3 methods while top-down approach can be used for cost estimation.
Which ever method is adopted in addition to the budgeting technique(e.g. incremental, zero-base etc.) will provide a realistic cost estimate for the project.
Where the WBS(work breakdown structure) is detailed, standard rates for critical components of costs (materials and labour) can be estimated by referring to local rates on the internet.

the parametric approach. It is easier, when the activities are divided into what you can count, so everything is based on the unit you are going to budget, so you have more control and precision in my case.

Thanks for the module

I guess this module will help me with the scheduling part

I believe parametric approach works perfectly because most items have a unit value which makes it easier to calculate the actual cost

The Bottom Up approach is the best for me since all those spending the money are able to give out clear and precise estimates. They are likely to give cost estimates with some tolerances either a plus or minus 5 since this approach generally seems to have an element of flexibility thus be able to avoid unnecessary risks in the future particularly within the projects cost constraints .

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.

According to my opinion that you should use the Top-down approach whenever possible because in this estimation we discuss with some experts and managers, and also estimating by some research. So may be some experts and managers already know about budgets for each activities like how much money will have to spend in each activities and may be it is also possible that they have worked experienced about budgeting so it will plus point for us and if we have any doubt of experts' estimation we can also research on this, by this we can come up with final desicion. I think the major advantage of this estimation that as we know, it is time efficient approach that is really very important for any project.

Thank you for sharing

For me the parametric cost estimates is the most preferred because its provides a more realistic budget estimate

I think combining all three would be good. Depending on the scenario , they could come in handy.

It depends on the size of the project. and to make it more ideal, i think it is good to use all the three approaches. if the estimate needs to be specific the bottom up approach will do better because people at the ground will be able to provide exact estimates. If we want to estimate big things like salaries, supplies and others then top down will really do better as managers and research will be involved. you can not involve a junior worker who is on the ground to estimate his own salary, obviously he will provide a very large estimate. Parametric will also contribute in coming up with specific estimates as well as cost per unit will do the perfect job in calculating the actual amount of the thing estimated.

From my point of view, the best way to generate cost estimates for a project is to combine all three methods. Indeed, the top-down approach has shown its limits and cannot be as realistic as the bottom-up approach as we assume that the people with whom we work are honest, while in some cases ( acquisition of equipment, cost of known activities), the parametric method is recommended.
It is therefore preferable to make a trade-off between all three methods to obtain a realistic budget.

Parametric cost budgeting is the best in my opinion. It gives out a true reflection on what's expected during implantation. However sometimes inflation mostly affects prices of certain commodities hence while making a budget one should be very keen not to miss out on this and more

I believe that you should use the top-bottom estimates .

If you want ,it is possible to use parametric but this is just to calculate so using the second approaches is better

You can use the top-down estimates .

I think, I'll go with Top Down approach because I still believed in the wisdom of Higher Management.

I prefer parametric method as it can be quick and realistic and also it is better to consult people who will be implementing the activities for consultation.

I prefer parametric method as it can be quick and realistic and also it is better to consult people who will be implementing the activities for consultation.

I believe that all of those approaches are effective when the matter is generating cost estimates. Why am I saying that? Because each one has appropriates circumstances to be applied and clearly we can find advantages and disadvantages in that process. Firstly, for Top-down there is possibility to generate cost for each section of the work breakdown structure which isn't enough to cover every complementary services and goods. Secondly, for Bottom-up there is a possibility to put the dishonest employees in action, they can not tell the truth about the real cost for their section of the work breakdown structure or even make wrong the cost estimates and ask for less of how much they really need to do the activities of their own section. And, thirdly, for parametric which sometimes can be considered the best approach even having available the cost-per-unit if we have to manage a big project it can take a plenty of time trying to make counts for each category of goods or services that are necessary. So, in summary, that level of project management is hard and we have to study our organization and figure out which one is appropriate for each situation and apply being conscious of the risks of each of them, or we can try to combine all of them.

The parametric approach, in my opinion, is the best approach because it is not overly complicated; all that is required is to ensure that you have a true actual cost per unit and then multiply, and this calculation is quite simple, so it certainly simplifies a seemingly complex activity.

The Parametric approach should be used.
Because it saves time and it is easier. What is most important is to get the right cost per unit

I believe that the use of bottom-up approach is best since you will be working with the real cost rather than being unsure yet the budget is something crucial to the success of the project

In Parametric approach. lies in that the observed values are used to model the non-observed ones and this assumption might not be true. The resulting estimators could then be seriously biased. A parametric modulization and the solution via maximum likelihood is another possible approach

I believe that the best approach to estimated a budget is by involving the three approaches i.e Top- bottom, bottom-up, and products' unit cost for this provides a broader view.

I believe you should use the parametric approach to Estimating budget whenever possible because it gives a more accurate estimate.

I believe that one should use each approach whenever possible because one approach can't be applied to all activities of the project.

I believe you should use the top-down approach whenever possible because it allows alot of other team members in the process and thus creates a room for honesty,and, it will be hard to forget some activities because the vast number of people will mean that the activities are listed as careful as possible. And to add on that, this approach is quick and simple.

Prametric approach will not always fduring cost estimate of activities especially social a nd environmental impact types., because it is diffifult to find out cost per unit for those activities. Then bottom-up approache may help in this case. Therefore the best way to find realistic cost estimate is the combination of bottom up and parametric approaches.

Ideally a combination of all three. Parametric would be used to calculate some of the fixed costs and costs of real goods. Beyond that top down with collaboration with employees in areas where there is not an established or well known expectation for the expense of the activity.

I think using a combination of bottom-up, top-Down and Parametric is the best option when estimating costs. Manager has to look at the cost involved, nature of the project, financial risks involved and vulnerabilities to ascertain when to use any of the approaches commensulate with the needs of the project

Top down is more effective than bottom down, I think

I prefer using the both methods to come up with the feasible cost estimates for the quality and reliable products and services. for top down approach you will know the price and even the best quality and exact place to buy them, for bottom up you will know the most applicable items for your project and then parametric method will help you estimate the accurate costs.

I agree with most of the previous comments. I think all 3 approaches should be used depending on the cost to be budgeted, although it's sometimes hard to apply the bottom-up. In some cases the parametric approach is hard to apply, and in other circumstances the top-down approach may not come up with important facts that should be considered when estimating costs for other locations (and that beneficiaries are really aware of). For example, we had a construction project in an African country. We applied the top-down and parametric approaches. We have taken into account other construction projects in the region, controlled different budgets from local builders and construction companies. But what we did not know is that we should have considered a huge amount for "local bribery". Unfortunatelly, it was a common standard practise and became a problem that would have come up in an early stage if including a bottom-up approach.

As for me, i think the top-down approach is far more better since it does not give room for lower ranked officers to develop insincerity syndrome to the estimate cost.

I am happy to be in this team and i do like data management and data collection using electronic devices as it is easier and safe and the cost is not high

I feel combo of all approaches would be better as it would comprehensively capture all costs.

I agree with the idea of combining two approaches. The parametric approach tends to be applicable in a few scenarios while the bottom up which may seem ideal is more likely to be compromised by exaggeration.U sing all the three can be perfect but will use up more resources. Top down and parametric is therefore my preferred choice

Absolutely. They would work best in combination rather than individually

I believe it is of best interest to use all three approaches when estimating activity costs, because not every activity cost estimation will fit with one single approach.

The topic on the generation cost estimates present a clear view on how the project manager can develop an overall budget of a project. My organization often employs the the top-down approach when generating the project. the implies that the CEO of the organization, the project manager, the Board of Management, and Managers of different directorates are responsible of generating the cost estimates. In addition, the Project manager is often tasked to engage experts for professional opinion and carry out research on the constraints which may affect the budgetary process.

Parametric estimation is highly preferable because it is highly accurate than the rest since it is based on data that is existent.

I would choose the parametric approach because it is very realistic in my opinion.

A combination of the three approaches is best. You will be able to have both realistic(top-bottom) and assumptions (bottom-up) of the cost and by incorporating parametric estimates there will be ease in calculation.

In my opinion the Top-down approach is the one that works best as it allows team members especially the department heads to have a say in the estiamted costs. And of course with each budget we should allow a flexibilty which means even if we are not totally accurate with our research we are still within the budget line or at least not totally overboard.