Basis of Estimate

Basis of Estimate

Basis of Estimate Jonathan Poland

A basis of estimate (BOE) is a document that outlines the methodology and assumptions used to create an estimate for a project. It is typically used to provide a detailed explanation of how the estimate was developed, and to provide transparency and accountability for the estimate.

The BOE should include a description of the work that is being estimated, as well as the assumptions and constraints that were considered in developing the estimate. This may include information about the resources that will be required, the schedule for the work, and any other factors that could impact the cost or duration of the project.

In addition to providing a detailed explanation of the estimate, the BOE may also include supporting documentation, such as cost estimates for materials or labor, or references to industry standards or best practices that were used to develop the estimate.

The BOE is an important tool for managing projects, as it helps to ensure that the estimate is accurate and transparent. It is also useful for stakeholders, as it provides them with a clear understanding of the assumptions and constraints that were considered in developing the estimate, and helps to build confidence in the accuracy of the estimate. 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.


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.


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.


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.


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


Details of any analysis related to the estimates.


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


An audit trail of approvals for the estimate.

Learn More
Military Contracts 150 150 Jonathan Poland

Military Contracts

Military spending contracts are agreements between a government or its defense department and private companies or suppliers for the provision…

Abundance Mentality Jonathan Poland

Abundance Mentality

Abundance mentality is the belief that there is enough for everyone, and that abundance, rather than scarcity, should be the…

Community Problems Jonathan Poland

Community Problems

Community problems are local issues that can only be effectively addressed by involving the people who live in the affected…

Working Style Jonathan Poland

Working Style

Working style refers to an individual’s preferred approach to performing their job and completing tasks. This can include factors such…

Internal Benchmarking Jonathan Poland

Internal Benchmarking

Internal benchmarking is the process of comparing the performance of one aspect or function within a company to another aspect…

Substitution Pricing Jonathan Poland

Substitution Pricing

A substitution price is the price at which a customer will choose to switch to a different product or service…

Design to Logistics Jonathan Poland

Design to Logistics

Design for logistics involves designing products with the entire supply chain in mind, including manufacturing, packaging, shipping, warehousing, merchandising, and…

Decision Automation Jonathan Poland

Decision Automation

Decision automation refers to the use of technology to automate the process of making decisions. This can be done through…

Augmented Product Jonathan Poland

Augmented Product

An augmented product is a product that includes intangible benefits beyond the physical product itself. These intangible benefits may include…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Innovation Process Jonathan Poland

Innovation Process

Innovation refers to the process of making significant improvements by taking bold steps forward, rather than making incremental progress. This…

Specifications Jonathan Poland


A specification is a detailed description of the requirements or procedures that are necessary to implement or carry out a…

Brand Strategy Jonathan Poland

Brand Strategy

Brand strategy is the plan that a company has for building and managing its brand over time. It involves defining…

Boss Archetypes Jonathan Poland

Boss Archetypes

A boss is a person who manages and oversees the work of an organization, department, or team. The term “boss”…

Pull Strategy Jonathan Poland

Pull Strategy

A pull strategy is a marketing approach in which a company creates demand for its product or service by promoting…

Design-Driven Development Jonathan Poland

Design-Driven Development

Design-driven development is a product development approach that places a strong emphasis on design, with a focus on form, function,…

Sales Pipeline Jonathan Poland

Sales Pipeline

A sales pipeline is a visual representation of the sales process, from the initial contact with a potential customer to…

Calculated Risk Jonathan Poland

Calculated Risk

Calculated risk is an essential concept in the field of risk management. It refers to the process of carefully assessing…

Strategic Goals Jonathan Poland

Strategic Goals

Strategic goals are the specific outcomes that an organization or individual hopes to achieve through their strategy. The strategic planning…