Within Application Estimating: Benchmarking and Bottom-Up Techniques

PMBOK v8 Definition

Within Application Estimating refers to estimation techniques applied within a specific application area, industry, or organization. The PMBOK v8 defines two key approaches: Benchmarking, which is the comparison of actual or planned products, processes, and practices to those of comparable organizations to identify good practices, generate ideas for improvement, and provide a basis for measuring performance; and Bottom-up estimating, which is a method of estimating the duration, cost, or required resources by aggregating the estimates of the lower-level components of the work breakdown structure (WBS). These techniques belong to the Planning Process Group and are applied within the Cost and Schedule Management Knowledge Areas.

Why It Matters for the Exam

This concept appears frequently in PMI exam questions testing your ability to select the correct estimation technique for a given scenario. Expect these topics in situational questions where you must choose between top-down, bottom-up, parametric, or analogous estimating approaches. Benchmarking questions often test your understanding of cross-industry comparisons and organizational learning objectives.

Key Points to Remember (for the exam)

• Main Purpose of Benchmarking: Identify good practices, generate ideas for improvement, and provide a basis for measuring performance
• Benchmarking Scope: May exist within the performing organization or outside of it; can be within the same application area or other application area
• Key Advantage of Benchmarking: Allows analogies to be made for projects in different application areas or industries
• Bottom-Up Estimating Definition: Aggregating estimates of lower-level components of the WBS
• When to Use Bottom-Up: When an activity's duration cannot be estimated with a reasonable degree of confidence, the work within the activity is decomposed into more detail
• Common Confusion: Benchmarking is NOT limited to same-industry comparisons—it explicitly allows cross-industry analogies
• Key Output: Both techniques produce estimates that feed into the project management plan and performance measurement baseline

Typical PMI Exam Example

A project manager is developing cost estimates for a new software development project in the healthcare industry. The organization has never done a healthcare software project before but has completed similar projects in the financial sector. The project manager compares planned practices and processes to the financial sector projects to identify improvement opportunities. Which estimation technique is being used? → Benchmarking, because it allows analogies across different application areas.

PMI Exam Traps

• Trap: Confusing Benchmarking with Analogous Estimating Reality: Benchmarking compares products, processes, and practices for improvement ideas; analogous estimating uses historical data from similar projects for parametric calculations

• Trap: Thinking Benchmarking only applies within the same industry Reality: PMBOK v8 explicitly states benchmarking allows analogies for projects in different application areas or industries

• Trap: Assuming Bottom-Up estimating requires complete decomposition of all activities Reality: Bottom-up is used when an activity's duration cannot be estimated with reasonable confidence—it's a response to uncertainty, not a default approach

• Trap: Confusing Bottom-Up with Top-Down estimating Reality: Bottom-Up aggregates from WBS components upward; Top-Down starts with overall project scope and allocates downward

Important PMI Connections

Quick Review Questions

1. A project manager compares their project's planned practices to those of a construction company, even though their project is in IT. Is this a valid use of benchmarking according to PMBOK v8?

2. When should a project manager use bottom-up estimating instead of other estimation methods?

3. What are the three primary purposes of benchmarking as defined in PMBOK v8?

4. Can benchmarking be performed using projects from outside the performing organization?

5. What is the relationship between bottom-up estimating and the WBS?

PMBOK v8 Reference

Section 2.6 - Resources Performance Domain (Estimate Resources process, including Benchmarking and Bottom-up estimating as tools and techniques)