By Ray Myers, Jr., PMP Here are 3 techniques for estimating project costs. Top Down Sometimes referred to as analogous estimating Uses the actual cost of a previous and similar project as the basis for the new estimate Requires a good dose of Expert Judgment Bottom Up Estimate each individual work item Add each...
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By Ray Myers, Jr., PMP Project managers are under constant pressure to reduce the scheduled time to complete their projects.  It is called crashing the project when you add resources to shorten the project schedule.  Crashing usually requires the expenditure of additional resources which adds cost to the project. Here is how you calculate...
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By Ray Myers, Jr., PMP Do you plan for travel time and travel expenses when bidding, proposing, or planning projects?  If not, you should and here is why. Let’s say that you are bidding a 4 week project that will that will be accomplished entirely at your customer site in another state.  Your on-site...
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By Ray Myers, Jr., PMP ROM estimates are used for strategic decisions, long range planning, or simply to respond to questions such as: How big is the bread box? or, Approximately, just for grins, how much are we talking about? The first step is to determine if a ROM estimate is appropriate.  Review the...
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By Ray Myers, Jr., PMP There are three types of estimates that may be used for project estimating: Rough-Order-of-Magnitude (ROM) Estimates (-50% to +50%) Budget Estimates (-10% to +25%) Definitive Estimates (-5% to +10%) Some or all of these estimate types may be used on a project. When providing project estimates, be sure to...
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By Ray Myers, Jr., PMP Parametric Estimating is an estimating technique that uses a statistical relationship between data and other variables to calculate the estimate.  It is simply a mathematical model. The complexity of the model may vary based on the nature of the project or activity to be estimated.  For example, you could...
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By Ray Myers, Jr., PMP  While there are a number of contract types, Firm Fixed Price (FFP) and Cost Reimbursement contracts are the most common.  Procurement specialists and contracting officers typically prefer FFP contract vehicles because this type of contract provides the most cost protection for the buyer. The contractor or seller under fixed...
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By Ray Myers, Jr., PMP T&M, short for Time and Materials, is a common pricing methodology that is used when the project scope is not clearly defined or when the scope frequently changes.   T&M contracts are ideal for small projects or tasks because the client pays for only the actual hours worked and...
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By Ray Myers, Jr., PMP According to the businessdictionary.com, margin is defined to be: the difference between the cost price and the selling price of a product.  In other words, margin is the profit earned on a business transaction. Margin is usually measured as a percentage of the selling price.  Thus the project manager...
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By: Ray Myers, Jr., PMP  Is there a difference?  You bet, and understanding the difference between these confusing terms may impact the profit you make on your project.  Let’s define the terms and do a quick calculation to see the difference between the two pricing concepts. Markup Markup is the difference between the cost...
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