Rough Order of Magnitude (ROM) Estimate versus Definitive Estimate (PMP CONCEPT 21)

This is our 21st post in our new learning series: PMP Concepts

Each post within this series will present a comparison of common concepts that appear on the PMP and CAPM exams.

Rough Order of Magnitude (ROM) Estimate versus Definitive Estimate

Depending on the organizational structure in which you’re managing projects and the type of project you are working on, you may use different approaches to estimating. Two common estimating types are ROM estimates and definitive estimates.

Rough Order of Magnitude (ROM) Estimate

A rough order of magnitude (ROM) estimate is the least accurate estimate. ROMs are -50% to +50% accurate, or potentially even larger. ROMs are used very early in the project when there is limited information from which to develop an accurate estimate.

Definitive Estimate

In project management, a definitive estimate is as good as it gets! There is always the possibility of some variance from the estimate, but definitive estimates are -5% to +10% accurate.

A definitive estimate is based on detailed information from each work package within the WBS or estimates completed at the activity level.

Example

Prior to any significant analysis, we developed a ROM that the project would cost $1.5M. However, as we developed the WBS and were able to put cost estimates to each work package, the definitive estimate was $1.375M.

Summary

ROM estimates are used very early in the project when there is a lack of detailed information. Definitive estimates occur when there are accurate estimates at the work package or activity level.

PMP CONCEPT 22: Cost Estimate vs Budget

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