Project sponsors need an idea as to how much time and money a project will require.
Give an example of a rough order of magnitude, budgetary, and definitive cost estimates for an IT software development project.
Give an example as to how you would use the analogous, parametric, and bottom-up cost estimates.
Rough Order of Magnitude Estimate
The ROM estimate is the most preliminary estimate of the project’s cost. It is typically used in the early stages of the project, when there is limited information available. The ROM estimate is usually within a range of 25% to 75% of the actual cost.
For example, let’s say you are planning to develop a new software application. The ROM estimate for the project might be $100,000 to $200,000. This means that the actual cost of the project could be anywhere from $75,000 to $150,000.
The budgetary estimate is a more detailed estimate of the project’s cost. It is typically used in the planning stages of the project, when more information is available. The budgetary estimate is usually within a range of 10% to 20% of the actual cost.