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Basis of Estimates

The compiled backup that explains how project estimates were developed, including the assumptions and constraints considered, the methods and level of detail used, the estimate ranges, and the expected confidence or accuracy.

Key Points

  • Documents how estimates were derived, including data sources and techniques.
  • Lists key assumptions and constraints that influence the numbers.
  • States the level of detail and estimating approach (e.g., bottom-up, parametric, three-point).
  • Defines estimate ranges and the confidence or accuracy level communicated to stakeholders.

Example

On a building project, the project manager prepares a basis of estimates file that notes: steel prices assumed stable within +/-10% for six months; site access restricted to weekends (constraint); bottom-up estimates for structural work using vendor quotes; three-point estimates for landscaping; an accuracy of -5% to +15% with 70% confidence; and all source data and calculation steps.

PMP Example Question

Which document captures the assumptions, constraints, methods, ranges, and confidence levels used to create the project's estimates?

  1. Basis of Estimates
  2. Cost Baseline
  3. Risk Register
  4. WBS Dictionary

Correct Answer: A — Basis of Estimates

Explanation: The basis of estimates is the supporting documentation that explains how estimates were developed, including assumptions, constraints, methods, ranges, and confidence levels.

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