Determine the Estimate Type

There are three different categories of estimates the project manager needs to be familiar with. These estimates will dictate how much detail the project manager will need to provide in order to create an accurate estimate. The three estimate types are

• Rough order of magnitude This estimate is rough and is used during the initiating processes and in top-down estimates. The range of variance for the estimate can be “25 percent to +75 percent.

• Budget estimate This estimate is also somewhat broad and is used early in the planning processes and also in top-down estimates. The range of variance for the estimate can be “10 percent to +25 percent.

• Definitive estimates This estimate is one of the most accurate. It is used late in the planning processes and is associated with bottom-up estimates. The range of variance for the estimate can be “5 percent to +10 percent.