GMS 450 Chapter Notes - Chapter 6: Earned Value Management, Work Breakdown Structure, Estimation Theory
22 Feb 2017
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Based on collective judgments and experiences of top and middle managers concerning similar past projects. >managers estimate the overall project cost by estimating the costs of major tasks. >lower level of managers split up the budget among the tasks under their control. >they continue until all the work is budgeted. Overall budget costs can be estimated with fair accuracy. Errors in funding small tasks need not be individually identi ed. The decision made by the upper managers might be inaccurate due to limited knowledge causing potential for underperformance. Those responsible for executing these tasks estimate resource requirements. Get involved all employees > higher level of morale and motivation. Top management has little in uence over budgeting process. Risk of overlooking tasks by the lower level managers. Project broken down to major elements (wbs level 1 or 2) >estimate of duration ti (t stands for time) >estimate of cost ri (r stands for resources)
