Top-Down Estimating

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Top-down estimating involves estimating the schedule and/or cost of the entire project in terms of how long it should take or how much it should cost. Top-down estimating is a very common occurrence that often results from a mandate made by upper management (e.g., Thou shalt complete the project within six months and spend no more than $500,000!).

Often the schedule and/or cost estimate is a product of some strategic plan or because someone thinks it should take a certain amount of time or cost a particular amount. On the other hand, top-down estimating could be a reaction to the business environment. For example, the project may have to be completed within six months as a result of a competitor’s actions or to win the business of a customer (i.e., the customer needs this in six months).

Once the target objectives in terms of schedule or budget are identified, it is up to the project manager to allocate percentages to the various project life cycle phases and associated tasks or activities. Data from past projects can be very useful in applying percentages and ensuring that the estimates are reasonable. It is important to keep in mind that top-down estimating works well when the target objectives are reasonable, realistic, and achievable.

When made by people independent from the project team, however, these targets are often overly optimistic or overly aggressive. These unrealistic targets often lead to what Ed Yourdon (1999) calls a death march project:

I define a death march project as one whose “project parameters” exceed the norm by at least 50 percent. This doesn’t correspond to the “military” definition, and it would be a travesty to compare even the worst software project with the Bataan death march during the Second World War, or the “trail of tears” death march imposed upon Native Americans in the late 1700s. Instead, I use the term as a metaphor, to suggest a “forced march” imposed upon relatively innocent victims, the outcome of which is usually a high casualty rate (2).

Project parameters include schedule, staff, budget or other resources, and the functionality, features, performance requirements, or other aspects of the project. A death march software project means one or more of the following constraints has been imposed (Yourdon 1999):

* The project schedule has been compressed to less than 50 percent of its original estimate.
* The staff originally assigned or required to complete the project has been reduced to less than 50 percent.
* The budget and resources needed have been reduced by 50 percent or more.
* The functionality, features, or other performance or technical requirements are twice what they should be under typical circumstances.

On the other hand, top-down estimating can be a very effective approach to cost and schedule analysis (Royce 1998). More specifically, a top-down approach may force the project manager to examine the project’s risks more closely so that a specific budget or schedule target can be achieved. By understanding the risks, trade-offs, and sensitivities objectively, the various project stakeholders can develop a mutual understanding that leads to better estimation. This outcome, however, requires that all stakeholders be willing to communicate and make trade-offs.

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