Question

How can cost estimates be used for type of project where the product certainty, process certainty and resource certainty are all low?

a.

As a fixed anchor point for finishing the project and determining the cost

b.

As a rough guide for the magnitude of the project

c.

As a sensitivity analysis for cost drivers

d.

To allocate effort and time for the project

Posted under Project Planning and Control Software Engineering

Answer: (b).As a rough guide for the magnitude of the project Explanation:In a project where the product certainty, process certainty and resource certainty are all low, cost estimation using formalized models is not feasible. Use of such models presupposes that we know enough about project at hand to be able to compare it with previous projects, but in this type of project, this is not the case. Instead, we may rely on expert judgments to achieve a rough cost estimate. However, this estimate should not be used as a fixed anchor point as to when project should be finished and how much it may cost, as there are too many uncertainties involved. Rather, it provides us with some guidance as to the magnitude of project. Based on this estimate, effort and time can be allocated for the project, for instance to produce a certain no. of prototypes, a feasibility study, a pilot implementation of part of product, or to start a certain number of time boxes. The hope is that in time the uncertainties will diminish sufficiently so that project shifts to one of the other situations.

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