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Project Management Accurate Estimates Are Term Paper

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Project Management

Accurate estimates are critical to effective project management for several reasons. They are first used to determine the return on investment of the project, enabling management to decide whether or not the project is worth doing. Then they are used to help develop a timeline for the project, and a schedule of cash flow needs. Throughout the life of the project, the estimates are used an a point of comparison to help give management a sense of how well the project is progressing.

The bottom-up estimating approach starts with the people who will be doing the work. The project's tasks are broken down into components and the person responsible for each component gives an estimate of how much it will cost. Because of their expertise, this is the most accurate way to build costs. The top-down approach begins with senior management. They build estimates based around similar projects, group consensus or some sort of mathematical relationship. These estimates are often quite rough, but they are easier to obtain.

The conditions under which I would prefer bottom-up are situations with high risk or high cost. In these situations, it is imperative that the cost estimates produced are of the highest possible standard. I would also prefer the bottom-up approach for projects that are totally unique in the company's history. Without any basis for an estimate from management, it would be best to break the project down into component parts, not just to gain an estimate but to gain a sense of what difficulties might arise during the project's lifespan.

I would prefer the top-down method for relatively routine projects, in particular those with low risk or low cost. The estimates for these projects need not be accurate, and therefore the cost of producing the estimate should kept as low as possible while maintaining some semblance of accuracy.

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