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Rough Order of Magnitude (ROM): Types, Examples

# Rough Order of Magnitude (ROM): Types, Examples

Published
19th Feb, 2024
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9 Mins

Stakeholders often calculate the cost associated with a project before starting it. But with the little information they have about the project, all they can do is make an estimation based on the Rough Order of Magnitude (ROM). This method is one of the most useful methods for determining the scale of any project and is an estimate of its rough order of magnitude or ROM. ROM estimates are useful for gaining a rapid understanding of the work required for a project. Learning all these methods of estimation will be made easy when you go for PMP course online.

## What is Rough Order of Magnitude?

You must be wondering, ‘what is a ROM estimate?’. The first step towards executing any successful project is getting an overall estimation of its scope and costs. This generic estimation of the scope and cost of a project is known as a rough order of magnitude estimate in project management.

This estimation is done when a project is at the selection and approval stage or the pre-intake phase of the project. In accordance with PMI and PMBOK, ROM estimates have an accuracy of the lower boundaries of –25 to upper boundaries of +75. The boundaries help come up with an high level estimate for evaluating the economic feasibility of the project. It's typically used to estimate a project’s overall budget with little or no detail. This is more important because it helps the executives of a company get the overall forecast of the project that they will delve into.

Having this insight about a project much ahead of its commencement helps in understanding the feasibility of the project. With a Project Management certificate online you can be an efficient project manager and manage multiple projects with ease.

### Importance of ROM in Project Management

Presenting a rough order of magnitude sample is important before starting any project for stakeholders. Here are a few points that one must note while estimating the rough order of magnitude:

1. The rough order of magnitude project management is often presented to executives who require a high-level overview of what the potential cost of the task might be. This is especially useful if they don't yet have the authority to fully explore the nature and specifications of the work.
2. Rough order of magnitude is important because it helps stakeholders determine whether they must go ahead with a project or leave it.
3. Rough order of magnitude is way more flexible than other methods of computation of costs and timelines.
4. Having an estimate via the rough order of magnitude can enable smooth negotiations about prices with vendors as well as customers.
5. It helps for managing technological debt and estimate strategies.
6. The complexity and cost of the project are two factors that this tool also aids decision-makers at different levels of the organization in taking into account. You can master all these with the ROM estimate pmp course.

### Difference Between ROM and Definitive Estimate

Both these methods are used depending upon each project. They are significantly different from each other. Take a look at their differences:

Rough Order of ManagementDefinitive Estimate
You have to ensure that the project's scope is accurately stated while using a ROM estimate with lesser details.You must make sure that adequate data has been obtained before providing a final estimate so that your project can proceed without any major issues.
The ROM estimates have more variables.A definitive estimate has a lesser number of variables.
Estimates of the rough order of Magnitude are typically less exact and precise.As evident from the name itself, definitive estimates are more accurate.
A rough order of magnitude requires lesser time and effort to give an estimate.It requires more time and effort to prepare a firm estimate.

## Different Techniques to Calculate ROM

You can choose from various methods of estimation. You can also refer to any rough order of magnitude template excel if you want to calculate it easily. Here are three techniques that you can use while calculating the costs and other variables of a project:

### 1. Analogous Technique

Applying observed cost, time, or resource needs to a current project or parts of a project entail drawing on the estimators' experience or historical data from prior projects. Analogous estimation is also known as the top-down approach of estimation. This method is useful when little information is available at your disposal.

Like all methods, this method too suffers from a significant drawback. Since the project manager makes assumptions based on previous projects, he assumes that the new project will also have similar factors. However, this notion always does not hold true. All the variables are constantly fluctuating with time. This raises the possibility of considerable deviance from the project's real cost or time. Below is how you can employ the analogous technique:

• Make a list of projects similar to the one at hand.
• Get an idea of all the factors and variables of the previous projects, such as time, costs, working conditions, etc.
• Rule out the projects with dissimilarities and consider only the ones closest in resemblance with the current project.
• From the historical data, choose or compute the estimate.

### 2. Parametric Estimation

The second method of estimation is the parametric method of estimation. When estimating activity factors like cost, budget, and duration, parametric estimating makes use of a statistical link between historical data and other variables. This method, too, like the other methods, applies a formula or method for performing these calculations, using the precise cost or time required to implement and complete a project or activity.

This method suffers from a drawback like all other methods. If the parametric value is extremely small and the number of units is very large, or the other way round, the accuracy of the project estimate may be significantly skewed. Hence, the accuracy of the overall estimate depends on the parametric value.

### 3. Three-point Estimation

The next method of evaluation is the three-point estimation method. This is a very interesting method, where three points, namely, optimistic, pessimistic, and realistic estimates are taken into consideration. Precisely, the three points it measures—the most likely estimate, the best-case estimate, and the worst-case estimate—are referred to. The algorithm aims to determine the possibility that any estimate will come close to reality. In case there is an inaccurate assumption of the situation, the estimates will invariably be flawed.

### 4. T-shirt Estimation

T-shirt sizing is a tool for capacity planning and project estimating that allows you to keep track of how much time or effort a particular venture will require. Similar to the labeling of t-shirt size, small tasks are typically denoted with S. Medium-sized tasks with M, big with L and XL, etc. Frequently, historical data or internal projects from the past serve as the foundation for the size criteria. This tactic can be easily applied to a huge number of objects, and this procedure is quick.

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## Guide to Creating a Rough Order of Magnitude

### 1. Scrutinize the Size of the Project

You can estimate the cost of your current project by looking at previous projects you've finished. Take a look at the details of similar projects you might have completed.

### 2. Establish a Timeline

For project planning, figuring out how long something will take and how long it will take to do a certain activity is crucial. By having an estimated time frame, you will be able to prepare your teams well ahead of time for delivery. You may also use it to give clients expectations.

### 3. Determine the Cost

Start with the essential costs when estimating the rough order of magnitude. Calculate the costs related to the rent, labor costs, equipment, etc. Learning the right techniques for calculating the rough order of magnitude PMP will be easy with a reliable online course and will help you establish yourself as a successful project manager.

### 4. Deploy Software

While it is possible to estimate the ROM manually, you can also automate some calculations and produce more accurate guesses with the aid of specialist software. The program can also swiftly assist you in modifying the estimate in accordance with the demands of the client.

## Conclusion

The more information you have about a project in hand, the easier it becomes for you to carry it out and estimate its costs. ROM provides at least a general concept of the cost range for projects, which is frequently useful for stakeholders to determine whether it will be wise enough to take up the project or not. You can refer to any rough order of magnitude estimate example online for a better idea to calculate and create it. You can also practice it by referring to a rough order of magnitude word template but if you want to learn it thoroughly and establish yourself as a successful professional, taking up KnowledgeHut PMP course online is the first step towards realizing your dreams.

### 1. What is the most accurate rough order of magnitude ROM?

The most accurate rough order of magnitude is -25 percent to +75 percent as suggested by the PMBOK or Project Management Body of Knowledge.

### 2. What is the difference between a rough order cost estimate and a definitive cost estimate?

The main difference between a ROM pricing estimate and a definitive cost estimate is the degree of precision. The former method is comparatively less accurate than the latter one. Additionally, the former has more variables than the latter one.

### 3. How do you find the rough order of magnitude estimate PMP?

To get ROM estimate, we will need to calculate the upper and lower boundaries:

• Lower Boundary: Rough Order of Magnitude Estimate x (1 - 25%) i.e. ROM Estimate x0.75
• Upper Boundary: Rough Order of Magnitude Estimate x (1 + 75%) i.e. ROM Estimate x 1.75

You can use this rough order of magnitude calculator formula to arrive at a reliable result quickly.

### 4. What is the range of a rough order of magnitude estimate?

The rough order of magnitude range is roughly between -25% to +75%. This is suggested by the rough order of magnitude PMBOK.

### 5. In what phase of a project do you give a rough order of magnitude (ROM) estimate?

Before the commencement of a project, a rough order of magnitude or ROM is given to stakeholders by the organization.

#### Zeshan Naz

Blog Author

Zeshan Naz holds 6 years of work experience in Content Marketing. EdTech is her field of expertise and she looks forward to helping more professionals get ahead in their careers. Zeshan is an avid reader and in her leisure time, loves traveling around and exploring places.