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TOPIC: Rough Order of Magnitude - Estimate Costs

Rough Order of Magnitude - Estimate Costs 4 years 2 months ago #2927

  • Rachu
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Hi All,

According to PMBOK, the Rough Order of Magnitude (ROM) range is -50% to +50% but I read in one another book that ROM range is -25% to +75%.

Any comments?

Thanks, Rachu.

Rough Order of Magnitude - Estimate Costs 4 years 2 months ago #2928

  • Cornelius Fichtner
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Here is an excerpt from an article I wrote:
You can be almost certain that one of the questions on the exam is going to test you on your knowledge of the five types of estimates. So in order to prepare for the exam you are going to simply have to learn the following estimate names and the spread (range) of the percentages by heart:

Rough Order of Magnitude estimate = -50% to +50% (PMBOK®)
Preliminary estimate = -15% to + 50%
Budget estimate = -10% to +25%
Definitive estimate = -5% to +10%
Final estimate = 0%

But not only will you have to know the percentages and be able to say what type of estimate you are looking at, you are also going to have to take actual estimate figures and determine what type of estimate we have. 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.

You also have to realize that an estimate which has a spread of -14% to +40% is still a Preliminary Estimate, even though the numbers don't match exactly. The ranges are approximations and you have to be able to determine into which type of estimate any given spread falls.

Once again, knowing this is simply a question of "practice makes perfect" and the more questions about estimating and the various spreads you answer the more familiar these numbers will be.

The trouble with these numbers is that there is no definite and ultimate authority that defines these. This is because an ROM in your industry may be different than in mine. So each book and each list that you open and look at you will see a difference in the numbers (even my list is slightly different than yours.)

Unfortunately, there is nothing you can do about this. It's simply the nature of the beast. The only course of action you have is to "shrug your shoulders and move on".

For the PMP exam please know the numbers that we publish in the PMP Exam Formula Study Guide (same as above).
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC
The following user(s) said Thank You: Anil Pasnani

Rough Order of Magnitude - Estimate Costs 4 years 2 months ago #2939

  • Rachu
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Thank you Cornelius, this explanation and estimate ranges will surely help.
Thanks again for the detailed article.
Regards, R.

Rough Order of Magnitude - Estimate Costs 4 years 2 weeks ago #2991

  • Edward Wada
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1. "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."

Can someone explain the math on above, since wouldn't 100,000 +/- 50% = $50,000 - $150,000?

2. "...you are also going to have to take actual estimate figures and determine what type of estimate we have"

Can you please give other examples, how to determine and calculate?

Thank you.

Rough Order of Magnitude - Estimate Costs 4 years 2 weeks ago #2996

  • Khurram Hussain
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Dear Edward:

Good day!

Don’t worry about the math when it comes to the Rough Order of Magnitude (ROM) estimate; they are rough estimates.

The PMBOK 4ed says it’s about -50% to +50%. I was just checking the PMBOK 5ed draft edition and now it says it is about -25% to +75%.

This doesn’t mean that one of the PMBOK guide is inaccurate. Both are correct. ROM is a concept, and does not have hardcoded percentages. Any estimate that is not accurate and that has a wide range between the optimistic estimate and the pessimistic estimate is a ROM estimate.

Please let me know if this clears your confusion.

Warm regards,

Khurram

Rough Order of Magnitude - Estimate Costs 4 years 1 week ago #3000

  • Edward Wada
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I am still confused at your response. One the commercial available sample questions, I was asked to pick from a range which was Rough Order of Magnitude, therefore can you clarify your answer further? Also give examples.

That is what my original question is asking. Thank you.

Can someone explain the math on above, since wouldn't 100,000 +/- 50% = $50,000 - $150,000?

2. "...you are also going to have to take actual estimate figures and determine what type of estimate we have"

Can you please give other examples, how to determine and calculate?

Rough Order of Magnitude - Estimate Costs 4 years 1 week ago #3003

  • Khurram Hussain
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Dear Edward:

Good day and thanks for your message. Please accept my apologies for the late response. I usually get an email notification when there is a post at the forum. Although your post was successful at the forum, somehow I missed the email notification.

Let’s break your problem into two parts:
1. What is a ROM ?
2. How would you calculate ROM in your Exam

Regarding ROM, as I have explained before, there is no hard and fast rule for calculating the ROM. The PMBOK4 said it’s plus/minus 50%. But now the PMBOK 5 pre-release edition says it’s from -25% to +75%. In theory every estimate that has a wide estimate range is a rough order estimate. For your example, if the target price is $100,000 then both $50,000 to $150,000 and $75,000 to $175,000 are rough order estimates; both are correct answers.

Now, let’s address your exam concern. For the exam questions, I would strongly recommend going for the PMBOK ranges. The PMBOK4 will be tested till June 2013, till then plus minus 50% is your guideline. If you see a -50% to +50% choice, choose that as your correct answer. If -50% and +50% is not available as one of the choices, search for the -25% and +75% choice. If both are not available, then pick the widest range. Remember, for the real exam, you need to make the best choice.

Another tip, use sample exam questions on internet as a tool to help you prepare for the exam. These are indeed very close to the PMI exams but are not from the PMI. The PMI PMP exams are filtered by many experts before they appear in an exam. You won’t see a question on the real PMP exam that asks you to identify the ROM and has both -50% to +50% and -25% to +75% as two choices to pick from.

Please let me know if that clears your confusion. If I have still failed to clear your confusion, please let me know if it is the ROM concept that is troubling you or some specific sample exam question?

Regards,

Khurram

Rough Order of Magnitude - Estimate Costs 2 years 4 months ago #4498

  • sana
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hello :),

well its so easy to learn the range for these estimates but what kind of questions will be imposed?
I came across a question, that mentions 3 point values and from it, they have found in which range of the estimate the value falls.. can you please tell as how to solve such questions or the sites that we should opt to get exam training.

Thank you !
please email me of the site , i will be utterly thank ful

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Rough Order of Magnitude - Estimate Costs 2 years 4 months ago #4509

  • Michael DeCicco
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Sana, You are correct that memorizing the types of estimate ranges is easier than some other complicated formulas. I am not sure about the question you are talking about, but I think any question about estimate types will give you a clue about the answer. Perhaps the words in the question might say Top Down or Bottom Up. Perhaps it might say they project manager has to get an estimate very quickly. Other clues might indicate where you are in the project management process. If you are in initiating phase, then a rough order of magnitude would be the correct choice.

As for additional training, if you are on this discussion, then you might know that PM Prepcast has an exam simulator for purchase. Another source of PMP training that really, in my opinion, makes learning easy is the Head First series.
Yours Respectfully
Michael DeCicco, PMP
Community Moderator

Rough Order of Magnitude - Estimate Costs 1 year 8 months ago #5268

  • Gilles
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PMBOK 5th edition page 201

ROM -25% to 75%

this is confusing, I think that they changed their ROM between editions

Rough Order of Magnitude - Estimate Costs 1 year 5 months ago #5723

  • Hasib Patel
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Can u help me, as in when these estimates are done(process group) as I am coming across question for the same !

Rough Order of Magnitude estimate = -50% to +50% - INITIATION
Preliminary estimate = -15% to + 50%
Budget estimate = -10% to +25%
Definitive estimate = -5% to +10%
Final estimate = 0%


Thanks in Advance.

Rough Order of Magnitude - Estimate Costs 4 months 3 weeks ago #7773

  • BINOY
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PMBOK page 201
For example, a project in the initiation phase may have a rough
order of magnitude (ROM) estimate in the range of −25% to +75%. Later in the project, as more information is
known, definitive estimates could narrow the range of accuracy to -5% to +10%. In some organizations, there are
guidelines for when such refinements can be made and the degree of confidence or accuracy that is expected.
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