Both bottom up and top down are cost estimation techniques in project management

Question

Both bottom up and top down are cost estimation techniques in project management. The main difference between the two is that bottom up estimating is accurate (but takes a long time to do), while the top down estimating technique is fast (but not accurate at all).

Top down estimating is used mainly in construction projects, where the requirements are more or less static, and there aren't too much unknowns. For example, we know that the cost of a bridge from a previous project is $1 million, so if our project consists of building a similar bridge, then the cost will be more or less the same after taking inflation into consideration. Top down estimating gives a fast estimate and is ideal for construction projects,

Where as, bottom up estimating takes a long time for the project manager to generate, but it gives accurate information and accurate deliverables. It can be carried out once the detailed information about the project is available and once the work break down structure is created. A WBS demonstrates all the work that needs to be carried out in a project. Bottom up estimating is ideal in software projects that will have a lot of deliverables.

Explanation / Answer

What are the differences between bottom-up and top-down estimating approaches? Determine advantages and disadvantages for using each approach. Under what conditions would you prefer one over the other? Provide a specific example to support your response.

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