**Basis of estimate**is a document that describes exactly how an estimate was calculated. It is often described as a tool or system as it gives you everything that you need to apply a consistent estimation method to programs, projects, processes or activities. The following are examples of basis of estimate content.

## Assumptions & Constraints

Any assumptions and constraints that were required to generate a set of estimates. This isn't a repeat of project assumptions but applies to the estimates themselves. For example, assumptions that were made to generate a list of comparable projects for estimate benchmarks.## Attachments

Identify the version of requirements, risk registers and other project artifacts that are the basis of the estimate. Attach any source documents such as price quotes from suppliers.## Estimate Summary

A high level summary designed to communicate the estimate to all stakeholders such that it can be easily understood.## Procedure

A description of the estimation procedure. For example, describing a bottom-up estimation process of identifying tasks and having subject matter experts estimate each. Include details of calculations or algorithms.## Guidelines

Principles that are used to guide estimates. For example, a principle of using three point estimates to estimate complex tasks.## Bottom-up Estimates

If bottom-up estimates are used the details are included at the level at which estimates were produced, typically the task level.## Parametric Estimates

The details of any calculations or algorithms that were used to generate estimates. Algorithms are sufficiently explained in plain language such that they aren't a mystery.## Analogous Estimates

Any comparisons that were used to generate or validate estimates based on your historical projects. The details of the historical projects used are listed.## Reference Class Forecasting

Any benchmarks that were used to generate or validate estimates using a database of similar programs, projects and initiatives. The details of relevant database entries are listed.## Third Party Estimates

Details of price quotations and other estimates provided by third parties.## Contingency

Details of contingency added to an estimate to account for risk. Potentially includes confidence intervals for estimates.## Analysis

Details of any analysis related to the estimates.## Validations

Details of sanity checks and validations that were performed. For example, a bottom-up estimate technique that is validated with reference class forecasting.## Approvals

An audit trail of approvals for the estimate.Overview: Basis Of Estimate | ||

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Definition | A document that describes exactly how an estimate was calculated. | |

Related Concepts |