Accuracy of Estimates : PMP/CAPM

Mudassir IqbalJanuary 22, 2023PMP ConceptsNo comments

The accuracy of an estimate is a measure of how close the estimate is to the actual value. The accuracy of an estimate can be affected by several factors, including the amount of information available, the level of detail in the estimate, and the method used to create the estimate.

A Rough Order of Magnitude (ROM) estimation is a quick, high-level estimate of the cost or time needed for a project. It is usually done early in the project planning process and has a high degree of uncertainty.
A preliminary Estimation is a more detailed estimate that is made after more information about the project has been gathered. It is less uncertain than a ROM estimate but still has a significant degree of uncertainty.
Budget Estimation is an estimate of the cost of a project that is used to create a budget. It is typically more accurate than a ROM or preliminary estimate and is used to allocate funds for the project.
Definitive Estimation is the most accurate estimate of the cost or time needed for a project. It is made after detailed design and planning have been completed and the project is ready to be executed. It is the final estimate before the project is executed.

The Usage of different estimates based on the Accuracy

Rough Order of Magnitude (ROM) estimates

are typically used early in the project planning process, when there is very little information available about the project. They are used to quickly get a general idea of the size and scope of the project and to help determine if the project is feasible.

Preliminary estimates

are used after more information about the project has been gathered, but before detailed design and planning have been completed. They are used to refine the project scope and to help establish a more detailed project plan.

Budget estimates

are used to create a budget for the project. They are used to allocate funds for the project and to ensure that the project stays within its budget constraints.

Definitive estimates

are used when the project is ready to be executed. They are the most accurate estimates of the cost or time needed for the project and are used to ensure that the project is completed on time and within budget.

All of these estimates are important for project management, as they provide a basis for planning, budgeting, and controlling the project. They help project managers to make informed decisions about the project and to anticipate and mitigate risks.

Mudassir Iqbal

I am the founder of Know Your Project (KYP) IT Consulting and Training Company. We are based in Pakistan but work extensively with middle-market businesses directly in the European, Middle East and South Asia Regions, as well as through partnerships with multinational companies like yours. I have personally delivered several digital change projects across many sectors globally - including construction, technology, finance, manufacturing, warehousing, logistics, telecommunication. My areas of expertise are concerned with Business Process Re-engineering (BPR), IT Governance and Assurance, PMO Setup, and Business and IT Agility. I also have substantial experience strategizing ERP implementations and have been working with Oracle, SAP, Microsoft Dynamics and Odoo for the best part of my professional life. Both nationally and internationally, I’m also providing in-depth, high-caliber executive development and training in various fields, covering topics such as project planning, project management, leading teams, cultural change. I’m a passionate writer and speaker on the topics of Digital Transformation, CIO, ERP and Project Management.