Your customer is asking for an order of magnitude estimate. What

numbers do you give him, assuming that your bottom up estimate gave you a

project cost of approximately CHF 200,000?

A.) CHF 170,000 to CHF 300,000

B.) CHF 155,000 to CHF 350,000

C.) CHF 190,000 to CHF 220,000

D.) CHF 180,000 to CHF 250,000

can some one explain why b and not A>

## Calculation qts

- kniraj
- Participant

Post

### Re: Calculation qts

Order of magnitude estimate is -25% to +75% and hence the answer b is the closest.

-----------------

Regards, Niraj

Regards, Niraj

- signor_rk
- Contributor

Post

### Re: Calculation qts

Here Bottom up Estimate is a distracting words only. For providing the Estimate to the Customer , it is on the safer side to give in a range format. So , ROM Estimate is (-) 25% to (+)75% initially. When more details are available about the Scope of Work , the Definitive Estimate should be given.

In this case the Customer is asking for ROM.

So , lower value = 0.75* CHF 200,000 = CHF 150,000

Upper value = 1.75 * CHF 200,000 = CHF 350,000

As mentioned by Niraj , Option # B) is close to this range of Estimates.

In this case the Customer is asking for ROM.

So , lower value = 0.75* CHF 200,000 = CHF 150,000

Upper value = 1.75 * CHF 200,000 = CHF 350,000

As mentioned by Niraj , Option # B) is close to this range of Estimates.

Regards ,

Ranjit

Ranjit

- dipti5ece
- Contributor

Post

### Re: Calculation qts

Hi Ranjit,

I still did not get considering Order of magnitude estimate is -25% to +75%....how your lower value is 0.75* CHF 200,000,

would we not subtract -25 and add 75 to this value?

200,000 - 25 ....and 200,000 + 75 somwehre 175-275 range

If this is not correct I guess I have a gap..can you help me to clarify this>?

I still did not get considering Order of magnitude estimate is -25% to +75%....how your lower value is 0.75* CHF 200,000,

would we not subtract -25 and add 75 to this value?

200,000 - 25 ....and 200,000 + 75 somwehre 175-275 range

If this is not correct I guess I have a gap..can you help me to clarify this>?

- dipti5ece
- Contributor

Post

Hi Ranjit,

I still did not get considering Order of magnitude estimate is -25% to +75%....how your lower value is 0.75* CHF 200,000,

would we not subtract -25 and add 75 to this value?

200,000 - 25 ....and 200,000 + 75 somwehre 175-275 range

If this is not correct I guess I have a gap..can you help me to clarify this>

### Re: Calculation qts

signor_rk wrote:Here Bottom up Estimate is a distracting words only. For providing the Estimate to the Customer , it is on the safer side to give in a range format. So , ROM Estimate is (-) 25% to (+)75% initially. When more details are available about the Scope of Work , the Definitive Estimate should be given.

In this case the Customer is asking for ROM.

So , lower value = 0.75* CHF 200,000 = CHF 150,000

Upper value = 1.75 * CHF 200,000 = CHF 350,000

As mentioned by Niraj , Option # B) is close to this range of Estimates.

Hi Ranjit,

I still did not get considering Order of magnitude estimate is -25% to +75%....how your lower value is 0.75* CHF 200,000,

would we not subtract -25 and add 75 to this value?

200,000 - 25 ....and 200,000 + 75 somwehre 175-275 range

If this is not correct I guess I have a gap..can you help me to clarify this>

- kniraj
- Participant

Post

### Re: Calculation qts

Dipti,

You have to subtract, but not 25 and 75 ... but 25% and 75% of the estimate.

lower range = 200000*0.25 = 50,000 hence 200000-50000 = 150000

upper range = 200000*0.75 = 150000 hence 200000+150000 = 350000

You have to subtract, but not 25 and 75 ... but 25% and 75% of the estimate.

lower range = 200000*0.25 = 50,000 hence 200000-50000 = 150000

upper range = 200000*0.75 = 150000 hence 200000+150000 = 350000

-----------------

Regards, Niraj

Regards, Niraj

- signor_rk
- Contributor

Post

### Re: Calculation qts

hi Dipti ,

As Niraj simplified above :

Consider the Bench Mark Value as : 200,000

So ,

(-)25% from 200,000 ........ 200,000 (Bench Mark) .......... (+)75% from 200,000

=> (1 - 0.25 ) times 200,000 ....... 200,000 (Bench Mark) ........ (1 + 0.75) times 200,000

=> 0.75 * 200,000 ....... 200,000 (Bench Mark) ........ 1.75 * 200,000

=> 150,000 ....... 200,000 (Bench Mark) ........ 350,000

Actually I made some short cut, which you can also do with some practice.

As Niraj simplified above :

Consider the Bench Mark Value as : 200,000

So ,

(-)25% from 200,000 ........ 200,000 (Bench Mark) .......... (+)75% from 200,000

=> (1 - 0.25 ) times 200,000 ....... 200,000 (Bench Mark) ........ (1 + 0.75) times 200,000

=> 0.75 * 200,000 ....... 200,000 (Bench Mark) ........ 1.75 * 200,000

=> 150,000 ....... 200,000 (Bench Mark) ........ 350,000

Actually I made some short cut, which you can also do with some practice.

Regards ,

Ranjit

Ranjit

- dipti5ece
- Contributor

Post

### Re: Calculation qts

Thnakyou Ranjit and Niraj for the clear and to the point explanation.

My KA gap is covered now

My KA gap is covered now

- manishpn
- Expert

Post

I dont think that range is mentioned in PMBOK

### Re: Calculation qts

seebabhatia wrote:When do we use -10% to +25%?

I dont think that range is mentioned in PMBOK