Why is bottom up estimating generally considered more accurate than top down?

August 10, 2015 By

Looking for a way to compare bottom-up estimates with top-down estimates? Look no further than Microsoft Project. Yes, in Microsoft Project you can display a comparison of bottom-up estimates and top-down estimates right on the Gantt chart.

Estimating durations is an extremely important part of scheduling a project. It tells you before implementation whether or not your project will complete in the desired time frame, assuming all goes according to plan. And, if resources are applied, it will also tell you before commencement whether or not your project will generate revenue. There are numerous types of estimating techniques, including one-point estimating, analogous estimating, parametric estimating, three-point estimating.

There are also two approaches: top-down estimating and bottom-up estimating. In the top-down approach you will estimate the duration of deliverables and/or major deliverables. In bottom-up estimating you provide detailed estimates for each individual task making up your deliverables. Bottom-up estimating is more accurate, but requires that the project be well defined before commencement of estimating.

Generally, top-down estimating is done first and then later followed up with bottom-up estimating. Microsoft Project allows you to display the difference between the bottom-up estimate and top-down estimate on the Gantt chart. In this way you can focus in on estimates where there is disagreement.

This article describes how to display both bottom-up estimates and top-down estimates on the Gantt chart in Microsoft Project 2013 for comparison.

We have here in Figure 1 a schedule for the Repair & Improvement of a Piping System.

Figure 1

Note that all the tasks and summary tasks were entered using the auto-schedule task input mode. This was done so Microsoft Project would automatically update the start and finish dates of tasks based on the defined relationships between tasks. We have here entered the estimated duration of each task. This essentially is our bottom-up estimate where each task required to produce the deliverable is estimated.

Note in Microsoft Project the summary tasks are considered the deliverables and work breakdown structure (WBS) elements. At present our summary tasks or deliverables are based on the bottom-up estimates of each individual task producing the associated deliverables.

Now to display the top-down estimate we simply change the task mode of each summary task to manually schedule and enter each summary task’s top-down duration estimate, Figure 2.

Figure 2

So, instead of the summary task duration being automatically computed based on the associated individual tasks, we manually enter the duration of the summary task. Having done this, we see in Figure 2 by the aqua line and black summary bar line being equal length that the ‘Demolition Piping’ deliverable top-down estimate and bottom-up estimate are equivalent; no need for further investigation here. The ‘Install Piping’ and ‘Install Thrust Block’ deliverables both have shorter top-down estimates than bottom-up estimates.

Here the black summary line represents the top-down estimate and the red warning line displays the bottom-up estimate. Because of the discrepancy between the two estimates we know we need to take a closer look at the estimates involved in the bottom-up estimate of these two deliverables. In the last deliverable, ‘Quality Assurance’, the bottom-up estimate displayed with the aqua line is shorter than the summary task. We might want to reexamine the top-down estimate and make certain the bottom-up estimate here is not too optimistic.

Summary

Accurate estimating is an important part a making sure you have a realistic schedule. Bottom-up estimating is generally more accurate, but estimating techniques in a top-down approach can also provide a reasonable estimate of the schedule with less effort.

Deliverables where the bottom-up estimate and top-down estimate agree should provide a level of confidence in the accuracy of the associated estimates. In Microsoft Project 2013 the differences in bottom-up and top-down estimates can be clearly visualized on the Gantt chart. This provides a real quick warning when these deliverables and associated tasks require further inspection.