Bottom-Up Estimating – Excel Tutorial

In this article, I’ll show you how to setup Bottom-Up Estimates formulas in Excel to support your Cost Management Plan.

1. Previous: Analogous Estimating
2. Next: Three-Point Estimating
3. Download: Cost Management MS Word and Excel Templates

Explanation:

Bottom-Up Estimating involves breaking down the project into smaller components or tasks and estimating the cost of each individual part. These task-level estimates are then aggregated to calculate the total project cost. This approach is highly accurate but time-consuming.

Step-by-Step Guide for Excel:

1. Define Work Packages or Tasks:

List all the tasks or work packages required to complete the project. Each task should have its own cost estimate based on labor, materials, equipment, or other resources.

2. Estimate Individual Costs:

Estimate the cost for each task based on the number of hours, the cost of materials, or any other resources required.

3. Sum the Costs:

Once all task-level estimates are available, sum the costs to get the total project estimate.

Sample Data to Import into Excel:

Task	Labor Hours	Labor Rate ($/Hour)	Material Costs ($)	Equipment Costs ($)	Other Costs ($)	Total Task Cost Formula	Total Task Cost ($)
Task 1: Design	100	50	500	1,000	200	=(B2*C2)+D2+E2+F2	7,200
Task 2: Develop	200	60	1,200	2,500	500	=(B3*C3)+D3+E3+F3	16,700
Task 3: Test	80	45	300	500	100	=(B4*C4)+D4+E4+F4	5,400
Task 4: Deploy	50	55	200	1,500	150	=(B5*C5)+D5+E5+F5	5,400
Total Project Cost						=SUM(G2)	34,700

Explanation of Sample Data:

• Task: Each row represents a specific task or work package required to complete the project (e.g., design, development, testing).
• Labor Hours: The number of hours required to complete each task.
• Labor Rate ($/Hour): The hourly rate for labor associated with the task.
• Material Costs ($): The cost of materials needed for the task.
• Equipment Costs ($): The cost of any equipment required for the task.
• Other Costs ($): Any additional costs not captured in labor, materials, or equipment.
• Total Task Cost Formula: The formula used to calculate the total cost for each task by summing labor, materials, equipment, and other costs.
• Total Task Cost ($): The final estimated cost for each task.

Formula Breakdown in Excel:

1. For Task Costs:
   • In cell G2: Enter =(B2*C2)+D2+E2+F2 to calculate the total cost for Task 1: Design.
   • In cell G3: Enter =(B3*C3)+D3+E3+F3 for Task 2: Develop.
   • In cell G4: Enter =(B4*C4)+D4+E4+F4 for Task 3: Test.
   • In cell G5: Enter =(B5*C5)+D5+E5+F5 for Task 4: Deploy.
2. For Total Project Cost:
   • In cell G6: Enter =SUM(G2:G5) to calculate the Total Project Cost.

How to Use the Table in Excel:

1. Task Definition: Begin by breaking down the project into individual tasks or work packages.
2. Cost Estimation: For each task, enter the labor hours, hourly labor rate, and other costs such as materials and equipment.
3. Cost Calculation: Use the formulas in the Total Task Cost column to automatically calculate the cost of each task.
4. Summing Total Project Cost: At the bottom of the sheet, use the SUM function to aggregate the costs for all tasks and calculate the total project cost.

Sample Interpretation:

• Task 1: Design: Requires 100 labor hours at a rate of $50/hour, with additional material, equipment, and other costs bringing the total cost to $7,200.
• Task 2: Develop: Involves 200 labor hours at $60/hour, with a total cost of $16,700 after factoring in materials, equipment, and other expenses.
• Total Project Cost: The sum of all tasks results in a total project cost of $34,700.

Downloadable Excel Setup:

In your Excel sheet:

1. Label the first row with Task, Labor Hours, Labor Rate ($/Hour), Material Costs ($), Equipment Costs ($), Other Costs ($), Total Task Cost Formula, and Total Task Cost.
2. Input task details into the relevant columns.
3. Use the formulas in the Total Task Cost column to compute the cost of each task, and sum the total project cost.

Customization Tips:

• You can modify this template by adding more tasks or adjusting the breakdown for each task.
• If you have additional categories (e.g., Contractor Costs, Travel Costs), you can add more columns for those specific cost types.
• By adjusting the Labor Rate or Equipment Costs columns, you can quickly see how changes in key inputs affect the overall project cost.

This Bottom-Up Estimating Excel template allows users to break down project tasks and calculate detailed estimates for each, ensuring accuracy and providing visibility into each cost component.

Download Excel Templates

Use these Cost Management Plan templates to establish a framework for estimating, budgeting, and controlling the costs of your IT project. Includes Explainer Guide to configure the Excel formulas.

MS Word

• Cost Management Plan: 41 pages
• Explainer Guide: 15 pages

MS Excel spreadsheets

• Analogous Estimating
• Bottom-Up Estimating
• Parametric Estimating
• Three-Point Estimating

Download: Cost Management Plan templates (MS Word + Excel)