Cost Estimation as an Important Aspect of Project Management - Assignment Example

Considering every unit is billed accordingly, a good project manager should have a rough idea of how long the project will take if the project is billed with time, how many people will undertake a certain project, and how much each is paid, and therefore, depending on how close the estimation is, the accuracy presented by parametric estimation makes it very efficient, unlike analogous cost estimation.

Bottom-up budgeting is very time-consuming and takes away control of top-level management (Pinto 2010). This may eventually lead to straying from the initial project goals. It is however very detailed covering a large chunk of the project details. Ultimately, Top-down budgeting is preferred as it gives control to the top management of the company, thus project goals are more often than not, met. Since it also draws on historical project costs, it takes much less time as compared to Bottom-up budgeting.

It however can result in misunderstandings between the top, mid-level, and lower-level management as it results in a zero-sum game since managers would benefit from the loss of some of their colleagues.