What is Bottom-Up Estimating?

Bottom-up estimating involves the estimation of work at the lowest possible level of detail. These estimates are then aggregated in order to arrive at summary totals. By building detailed cost and time estimates for a work package, the probability of being able to meet the estimated amounts improves substantially. The people who derive these estimates are usually those involved in a project team; they have hands-on knowledge of the proposed work, and so are in the best position to understand the associated work requirements.

Advantages of Bottom-Up Estimating

There are multiple advantages to using bottom-up estimating. First, because these estimates are derived by people directly involved with a project, they tend to be quite accurate. Second, this approach can be used in conjunction with other estimation techniques to arrive at a more fine-tuned final estimate. And finally, any estimation errors made using the bottom-up approach tend to balance out, where over-estimates in one area are offset by under-estimates in other areas. This means that the overall estimate for a project may still be reasonable.

Disadvantages of Bottom-Up Estimating

The main disadvantage of bottom-up estimating is that it can take a substantial amount of time to complete. This can be a concern when a project estimate must be completed very quickly, and especially when the people who must compile the estimate are otherwise occupied. In cases where there is a strong history of accurate estimates for similar projects, and where there are no unusual features to a project, it may be reasonable to use top-down estimating instead, and avoid the time required to complete a bottom-up estimate.

Bottom-Up vs. Top-Down Estimating

Bottom-up estimating is preferred over top-down estimating, where management imposes cost and time figures on a project without having gone through any detailed analysis to substantiate their results. Top-down estimating is more likely to result in significant differences between actual and estimated results.