Exercise 3

Below are the project costs estimates using a top-down approach. The costs of each top project deliverables for each phase are apportioned as a percentage of the total project cost.

Total Project Costs: $550,000

Planning Phase:

Planning Cost: 15%

Design Cost: 20%

Execution Phase:

Engineering Cost: 25%

Engineering Material Cost: 10%

Implementation Phase:

Test Cost: 20%

Documentation Cost: 10%

1. What are the total project costs for each phase?
2. What weaknesses are inherent in this estimating approach?