Cost Estimation Approach Selection

The assignment content discusses the use of bottom-up and top-down estimates in measuring project cost, particularly in the context of a RCS project. The SWL organization is inexperienced and requires accurate estimation of project costs. The bottom-up approach is preferred for its ability to provide detailed project budgets, schedules, and monthly forecasts, as well as requiring less experience from management. On the other hand, top-down estimates are suitable only for experienced organizations with knowledge of project pricing. The content also discusses the advantages and best practices for outsourcing work to Tron AG implementation team, including expertise, cost savings, and building respect and trust. Additionally, it touches on resource leveling operations and their effects on project deadlines.

Section:-1
Answer: 1
(B.)
Conditions for using the bottom-up estimate are following:-
 Any organization which is using bottom-up estimate for measuring the project cost can be
inexperienced. In this estimate, less experience is required.
 Bottom-up approach is mostly suitable only for developing detailed project budgets, schedules
and monthly forecasts.
 Using bottom-up approach by the management requires more time because it is considered a
time consuming estimate.
 Bottom- up approach is based on the collective decision making and seeks to avoid the pitfalls of
change.
Conditions for using top-down estimate:-
 This estimate is only suitable for those organizations which is experienced.
 For accurate estimation of the cost, following top-down approach requires that the
management of the organization should have knowledge of project pricing.
 For the top-down estimate smaller-scale installation is considered the best environment.
 Top-down requires that management of an organization should have market knowledge and
clear insight into the details of a project.
For condition related to requirement of experience. For SWL, bottom up estimate is preferred because
the management of the organization is inexperienced. Bottom-up estimate is the case for RCS project
because implementing the bottom-up approach requires less experience from management. Hence,
SWL shall use bottom-up estimate under requirement of required experience.
For condition related to developing detailed project budgets, schedules and monthly forecasts. Bottom –
up approach estimate is preferred because RCS Project management prepare detailed project budgets
for which appropriate schedule and monthly forecasts is required, all this can be done by using Bottom-
up approach. This is the case for RCS project because management is inexperienced and it need to
conduct forecasts and develop schedules. Hence, SWL shall use Bottom-up estimate under the
requirement of detailed project budgets and schedules.
For condition related to requirement of more time. Bottom-up approach is preferred because it gives
accurate estimate after spent more time. This is the case for RCS project because it gives accurate
estimates of cost to management. Hence, SWL shall use bottom-up estimate under the condition of
requirement of time.
For condition related to collective decision making and avoid pitfalls of change. Bottom- up approach is
preferred because management is able to develop best decisions because of involvement of large

number of peoples. This is the case for RCS project because it requires good decision for estimating the
project cost. Hence, SWL shall use bottom-up estimate under the requirement of decision making.
For condition related to experience. Top up estimate is preferred, when the management of RCS is
highly experienced. Top- up estimate require high experience from the management. Top-up approach
is not the case of RCS project because the management have no any experience. Hence, SWL shall not
use top-up estimate for estimating the cost under the requirement of experience.
For condition related to requirement of knowledge related to project pricing. Top- up estimate is
preferred when the management is fully experienced and have overall knowledge of project pricing.
Top-up estimate is not the case of RCS project because the management is inexperienced and have not
any knowledge about the project pricing. Hence, SWL shall not use top-up estimate under the
requirement of project pricing knowledge.
For condition related to best environment. Top- up estimate is preferred because it provides best
environment through smaller-scale installation. Top-up estimate is not the case for RCS project because
it needed no any smaller scale installation environment during its working. Hence, SWL shall not use
top- up estimate under the requirement of environment.
For condition related to market knowledge. Top- up estimate is preferred when the organization have
higher knowledge of market. Top-up estimate is not the case for RCS project because the organization is
inexperienced and does not have any market knowledge. Hence, SWL shall not use top-up estimate
under the requirement of market knowledge.
Answer 2:-
a. Advantages of outsourcing the work to the Tron AG implementation team are following:-
 Expertise: - most of the times the organization outsourced their tasks to vendors who
specialize in their field. Due to the appointment of Tron AG, RCS project may utilize the
expert services. This will enhance the success chance of the RCS project.
 Reduced cost: - hiring the expert services reduced the wastage of resources, due to
which it helps the organization in cost saving. This leads the development of the project
in a structured budgeted amount.
b. The best practices for managing Tron AG are following:-
 Well defined requirements and procedures: - SWL defined all the requirements and
procedures to the consultancy Tron AG, this will improve their work quality without
raising any confusion.
 Build respect and trust: - SWL organization must be open, fair, and honest throughout
the project. By being open and trusting, both SWL and Tron AG foster a good
relationship. This reduced any unpleasant surprises, restrain from changes, and disobey
rules, which are common problems in outsourcing.
 Establish common objectives: - Establishing the common objective for both the parties,
helps in doubling the efforts for achieving the predetermined objective.
Answer 3

a.
b. Before following the leveling operation, some of the activities of the project was over
pressurized. This pressure was facing due to the deadline of the project activities. But, after
leveling, the operation pressure over the activities of the project seems reduced.
c. After performing resource levelling beyond the deadline affects the finishing date of the project.
After following the leveling option beyond the deadline the project which will be finished on 22
Dec will be finished on 26 Dec. leveling beyond the deadline helps the management in maintain
the quality of the project without pressurizing any activity.

Answer 4
(ii)
(iv) The following actions should be followed by the project manager for prevent all the issues raises in
question 4(a):-
 Project analysis should be conducted in a significant manner. Project manager should not
perform partial analysis but he should conduct analysis of all the activities involved in the
project.
 Timeline should be suitable as per the length of the project.
 Requirement of the project should be fulfilled timely for prevent undue stoppage of work.