Work definition and scoping

• Organizing and defining the project scope of work is a required prerequisite to all analytical estimates concerning projects.

• The WBS serves two purposes: (1) organizing the work and (2) providing data on the project deliverables.

• The WBS is not a project organization chart or a project schedule.

• The WBS may support more than one view of the project: sponsor's view, developer's view, operations and maintenance view.

• Most often, the WBS is a hierarchical structure of the project deliverables.

The OBS and RAM

• The people who work on projects may be assigned exclusively to the project or participate in the project and a "home" organization. The "home" organization breakdown structure is called the OBS.

• The OBS maps to the WBS by means of the RAM.

Work packages and cost accounts

• The work package is the lowest level of work identified with cost on the WBS.

• The cost account is a summation of subordinate work packages.

Chart of accounts

• The chart of accounts is a WBS of the business organized by financial accounts like expense accounts, capital accounts, and equity accounts.

• The WBS is typically an extension of the chart of accounts structure, touching expense and capital accounts most often.

WBS dictionary

• The WBS dictionary of a set of definitions of the work packages and cost accounts on the WBS.

WBS baseline

• The WBS baseline is the scope and cost decided on at the outset of the contract. The baseline is managed as a fixed set of numbers until changed through a change management process.

Project estimates

• The objectives of performing an estimate are twofold: to arrive at an expected value for the item being estimated and to be able to convey a figure of merit for that estimate.

Top-down estimates

• Top-down value judgments from the business side of the project balance sheet conveyed to the project team.

Similar-to estimates

• Similar-to judgments from either side of the project balance sheet, but most often from the other business side.

Bottom-up estimates

• Bottom-up facts-driven estimates of actual work effort from the project side of the project balance sheet conveyed to the project sponsor.

Parametric estimates

• Parametric calculations from a cost-history model, developed by the project team, and conveyed to the project sponsor.

Confidence intervals in estimates

• Every estimate should include some assessment of the risk of completing the project for the estimated figures.

• The Normal distribution is invoked by means of the Central Limit Theorem to describe the project outcome distribution probabilities.

• Cumulative probabilities from statistical distributions provide the data to assess the confidence of meeting the project outcome.

• Confidence intervals can be estimated for any WBS regardless of the estimating methodology.

Completion and level of effort estimates

• Level of effort is appropriate where the scope is indefinite.

• Completion should be used whenever it is possible to make the scope definitive.