The Estimate Activity Resources process is concerned with identifying the quantities of resources needed for the project’s activities.
The project manager and team will evaluate each activity and identify what labor and goods are needed.
Resources are anything having a monetary cost and include materials, equipment, licenses, fees, and personnel needed for the project’s activities.
Estimating resource needs is usually performed concurrently with cost estimating.
Estimate Activity Resources Process Decomposition
Estimate Activity Resources Process: inputs
- Activity list
The activity list is the complete list of project activities that are needed to produce the work packages.
It's decomposed from the WBS work packages. It’s the source document this process needs to identify what resources are required.
- Activity attributes
The activity attributes document is a companion to the activity list. It provides sufficient detail to fully describe the activity, and any supplementary information about activity, such as its relationships, constraints, assumptions, dependencies, and responsible people.
- Resource calendars
This may be one or more calendars that identify when people, equipment, and material are available and for what lengths of time.
For example, a resource calendar would indicate when supplies were expected to arrive and in what quantity.
There is also a composite resource calendar that shows the availability of named human resources on the project as well as their skills.
These calendars are useful during resource estimating because alternative resources may need to be identified if there’s a shortage of the desired resource.
- Enterprise environmental factors
Any of the many enterprise environmental factors and systems that influence the project should be considered.
These factors can include its personnel, its organizational culture, its tolerance of risk, and its formal and informal hierarchy.
Organizations may also have custom or commercial analytical databases that can include cost estimating, risk, or demographic data.
- Organizational process assets
Organizational process assets are the source of existing policies, processes, organizational data, and knowledge. The organization may have policies relating to staffing, rental, leasing, and purchasing of material.
Estimate Activity Resources Process: Tools and Techniques
- Expert judgment
Expert judgment is based on the experience and knowledge of subject matter experts. Estimating is always based on expert judgment.
- Alternatives analysis
Finding alternatives looks for different approaches in performing the work required by the project, or in the methods for achieving the project's objectives. Identifying resource needs will require an evaluation of different resource types, financial comparisons between staffing or outsourcing, renting versus leasing, and building versus buying.
- Published estimating data
A variety of commercially available publications and databases provide standardized rates, resources, labor, material, and other related categories which might be useful for estimating resource needs of the project’s activities.
- Bottom-up estimating
Bottom-up estimating looks at all the components of an activity in order to provide estimates. These component estimates are then aggregated to derive an estimate for the activity.
This is in comparison to top-down estimating, which relies heavily on expert judgment and looks only at the activity at high, overall level.
- Project management software
Project management software will offer tools to plan, calendar, estimate, evaluate, organize, and manage resource needs.
Estimate Activity Resources Process: outputs
- Activity resource requirements
The activity resource requirements document describes the resource needs at the activity level, which can be aggregated up to the work package level. It focuses on the resource types and quantities needed.
- Resource breakdown structure
The Resource Breakdown Structure is a graphical, hierarchical presentation of resources by type.
There is no hard and fast rule for its categorization, but it's generally better to have the RBS's categorization be in a manner similar to the work breakdown structure.
- Project document updates
Resource estimating and alternatives analysis may result in updates to the activity list, activity attributes, and resource calendars.
There are two general approaches to estimating.
Which approach we take is largely dependent upon how much information we have, so estimating during early phases is likely to be prone to inaccuracies, and the two different approaches can end up with different results.
- Top-down estimating is a form of expert judgment through which an item is looked at broadly and a generalized estimate created.
Top-down estimating is required when the details are not yet known, usually during the initiating and early planning processes.
While estimating resource needs for activities, we’re usually performing top-down estimating against summary (a.k.a. hammock) activities that haven’t been fully decomposed.
- Bottom-up estimating provides estimates for each component activity and then aggregates these into an overall estimate.
For example, if we were to develop a bottom-up estimate for cleaning out the garage, we'd start by estimating how long it'd take to remove the accumulated boxes, sort the items into keep, dispose, and donate piles, and then estimate how long to put everything back into the garage.
The aggregate of each of these estimates would become our estimate for the summary activity clean out garage.
Bottom-up estimating takes much more time than top-down, but it will generally produce the most accurate results as long as the component items are known and properly estimated.
Bottom-up estimating also requires a thorough level of decomposition of the item being estimated, which may not be possible when details are not yet fully known.
Estimates are at the core of many project management processes, and inaccurate estimates can lead to later perceptions that the project is off track.
Estimates are generally looser during the initiating phases, get clearer during the planning processes, and continue to be fine-tuned as further planning and executing processes get underway.
So that other people don’t reach the wrong conclusions, whenever estimates are provided we need to clearly identify and document how the estimates were derived, how probable they are, and what their accuracy range is.
There are three general classifications for the accuracy of estimates:
- Rough order of magnitude estimate: These are usually top-down estimates made by expert judgment. The variance range for this type of estimate is expected to be -25% to +75% of the final actual figure.
During early initiating or planning phases, this may be the only estimate available.
- Budget estimate: These have less variance than a rough order of magnitude, but they are still broad estimates. The variance range for this type of estimate is expected to be -10% to 25% of the final actual figure.
Budget estimates should be used once planning processes are underway, and previous rough order of magnitude estimates should be re-estimated.
- Definitive estimate: This type is the most accurate estimate. The variance range for this type of estimate is expected to be -5% to 10%.
Budget estimates of this type should be expected once substantial planning has occurred or project execution has been underway.
Resource Breakdown Structure (RBS)
The resource breakdown structure (RBS) provides a categorized, hierarchical representation of the project's resource requirements.
The purpose of the resource breakdown structure is to present the different resource types needed by a project, and a good RBS will also assist in cost estimating.
The resource breakdown structure is not intended to show us when resources are needed, only what types are needed.
The resource breakdown structure provides many of the same benefits that the WBS does.
It improves estimating communication, and overall project integration.
The first level of the RBS is usually grouped by categories such as:
A categorization for the different types of people needed for the project, whether internal or external (consultants, services).
- Tools, Machinery
Any items needed for the project but which are already available within the organization.
- Materials, Equipment, Hardware, Software
Items needed for the project which must be specially purchased, rented, or leased for the project.
- Fees, Taxes, and Licenses
Non-materials items needed.