Craig Brown and Mike Clayton have a related posts on the Work Breakdown Structure and estimating.

Building a credible cost or schedule estimate is a “process” focused effort. Let's start with the guidance documents we use:

• The GAO Cost Estimating and Assessment Hanbook
• NASA's Cost Estimating Handbook

While these guides appear to be applicable to only large government contracts, they have much to say about the process of cost and schedule estimating for all projects. The fundamental concpet is.

All variables in cost and schedule estimates are random. Knowing the statistical properties of these variables is a critical factor in producing a credible estimate.

Without this understanding all estimates are untrustworthy.

Building the Estimates Top Down

Mike Clayton suggests – as do others – that building the WBS can tale place top down, bottom up, or some combination.

Top Down is the only place to start. The WBS is a decomposition of the product and the processes that construct the product. If we start building the product bottom up, we'll end up with a hodge podge of parts assembled in some arbitrary manner. Image building a software product out of pieces and trying to assemble them into a production ready outcome.

Don't build the WBS bottom up – period. It's simply bad engineering.

Once the WBS is built top down – decomposed from the Statement of Work (SOW), the Statement of Objectives (SOO), the Statement of Project Outcomes (SOPO), the Concept of Operations (ConOps) – then and only then can it be adjusted from the bottom up.

Changes to the WBS are the same as changes to the Product Breakdown Structure (PBS). In fact the PBS is one part of the WBS. The other part is the Process Breakdown Structure, that identifies the processes needed to build the product.

Remember

The WBS is the combination of the Product Breakdown Structure (essentially the bill of materials for the Product) and the Process Breakdown Structure (the processes needed to produce the product).

With the WBS cost and schedule estimates can be made bottom up for each deliverable. Then revisit the total budget resulting from the roll out of cost and start making adjustments for the “planned budget.”

This iterative approach maintains the product structure integrity while assessing the deliverables from the budget.

To do anything else, breaks every piece of the project's integrity. Cost, Schedule, and Technical Performance are now dis-connected and the project heads straight for the ditch. A common occurance in the absence of a project management process.

Original post here: Herding Cats