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TOPIC: Cost Estimate - Order of Magnitude.

Cost Estimate - Order of Magnitude. 5 years 10 months ago #2096

  • Tarek Al-Fahham
  • Tarek Al-Fahham's Avatar Topic Author
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I am reading the email from PMP Formula Guide, about Cost Estimation methods.

I am refering to this paragraph:

For instance you have to be able to say that an estimate that has a range from $75,000 - $175,000 with a target price of $100,000 is an Order of Magnitude estimate.

Just to make sure I understand the logic here !!

The above range, based on $100,000 is -25% to +75%, so the closest matching range is -50% to +50%, and that is why it is Order of Magnitude Estimate (ROM) ?

Appreciate your confirmation ?

I think it will not be easy to find the matching range, and decide the related cost estimation method. Help ?

Tarek.
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