1. Why are accurate estimates critical to effective project management?

Without accurate time and cost estimates project control is ineffective. Inaccurate
estimates can make the difference between profit or loss.

Time and cost estimates are major inputs to project planning.

Project control is completely dependent on accuracy of estimates.
Estimates are needed to support good decisions.
Estimates are used to determine project duration and cost.
Estimates are used to develop cash flow needs.
Estimates are used to develop time-phased budgets and establish the project
baseline.
Absence of estimates results in inaccuracies which result in time and cost
under/overruns.
The activity of estimating reduces error.
2. How does the culture of an organization influence the quality of estimates?

Organization culture can influence project estimates depending on the importance

the organization places on estimating.

Use of top-down versus bottom-up estimating can influence estimates. How

padding is handled strongly influences estimates. How organization politics is
tolerated can severely influence estimates.

3. What are the differences between bottom-up and top-down estimating

approaches? Under what conditions would you prefer one over the other?

Top-down estimates are:

1. typically used in the project conceptual phase, and depend on measures such as
weight, square feet, ratios. Top-down methods do not consider individual activity
issues and problems.

2. good for rough estimates and can help select and prioritize projects.

Bottom-up time and cost estimates are

1. usually tied directly to the WBS and a work package.

2. made by people familiar with the task, which helps to gain buy-in on the validity
of the estimate. Use of several people should improve the accuracy of the estimate.
Bottom-up estimates should be preferred if time to estimate is available, estimating
cost is reasonable, and accuracy is important.

4. What are the major types of costs? Which costs are controllable by the project
manager?

the major types of costs:

1. Direct

: controllable by the project manager.

2. direct overhead

3. general and administrative costs.

Direct overhead and general and administrative costs are only controllable in the
sense that if the resource or project is finished early or late the costs will continue
for the duration of the project.