Rough Order of Magnitude

As the name suggests – Rough means not with that much accuracy (-50% to +50% )

Project cost estimation starts before initiation as the Owners want to know how much they need to get the job done.

A Rough Order of Magnitude, also known as ROM Estimate, is the first Estimate in the project life cycle.

For the sake of simplicity,  we can say that it is an estimation of the level of effort and cost to complete a project.

The primary purpose of a ROM estimate is to assist decision-makers in making the right decisions by providing them with relevant information.

You may be interested in also: Analogous & Parametric Estimation

When is ROM Used?

ROM estimate is used;

At Project Initiation: to screen/prioritize final decision-making as to which project to choose among available options.

During the Project Life Cycle: to estimate the final cost to conclude the project and are reviewed and refined as more and more information is gathered during the project execution phase.

How to make ROM Estimate?

Developing a ROM estimate takes a lot of skill and experience.

You’ll always need to involve relevant stakeholders and subject matter experts for their opinion on the required level of estimation to complete certain milestones. And as the term itself describes, it is a rough order magnitude, i.e., there will be a chance of inaccuracies, or the estimations will have limited accuracy.

It all depends on the experience and the information received from subject matter experts; ROM can have an accuracy level of -50% to +50% (As per PMBOK6). Ultimately we get roughly estimated information regarding the schedule and effort required to complete a milestone.

ROM estimates can also be made from the available references of similar projects from the past. For example, the total cost to establish a new plant with 100 metric tons capacity will almost two times the old plant with 50 metric tons capacity.

Tools Used in ROM Estimate

In general, the following are the main tools & techniques to get to the ROM estimate.

  • Ball Park estimate
  • Top-down estimation
  • Historical data and expert opinion

It is recommended to estimate in terms of time and cost. It helps the subject experts to provide their expert opinions in a most efficient and precise manner. As at the early stages, there is minimal information available, so it wouldn’t be possible to provide an accurate estimate of time and cost to divide the estimates into three categories. i.e., Low, Medium, and High. It could look like as below

ROM Estimate Categories

ROM estimates can be categorized into these activities. This is based on the level of effort.

Low Effort

  • Hours: 30 to 50 hours for completion
  • Cost: $1500 to $4500 dollars
  • Duration: 1 to 2 weeks
  • Number of Resources: 1 to 2 Resources

Medium Effort

  • Hours: 50 to 250 hours for completion
  • Cost: $4500 to $10,000 dollars
  • Duration: 1 to 3 months
  • Number of Resources: 3 to 5 Resources

High Effort

  • Hours: 300 to 1000 hours for completion
  • Cost: $15,000 to $50,000 dollars
  • Duration: 4 to 6 months
  • Number of Resources: 5 to 15 Resources

This kind of category, as listed above, makes life easier for everyone by breaking down the work into every possible manner at the early stages of the project. Similarly, subject experts would be more comfortable in providing the estimates with this kind of model.

Example of a ROM Estimate

For example, for the development of a new product, the statement of work might only give you limited information such as:

  • Develop product requirement
  • Product specification
  • Target market
  • Estimated time and budget

But we can apply the techniques mentioned above to have a ROM estimate.

Accuracy of ROM

The accuracy of the ROM estimate will increase with the passage of the project life cycle.

In the beginning, it could be around -25% to +75%.

Similarly, at half of the project life cycle, as more and more information is available, ROM’s accuracy could be -15% to 15%.

It all depends on the available statistical data from past projects and in-depth knowledge of the accuracy level of underlying tasks in the project. For example, if we have a Task A with an accuracy level of 40%, Task B with 60%, and Task C with 90%, and all three tasks have the same number of hours, then the accuracy of a complete project estimate will be

Accuracy of Project Estimate = (Accuracy level of task A + Accuracy level of task B + Accuracy level of task C)/3

Accuracy of Project Estimate = 63.3%

In the end, it all depends on the type of organization as to what level of ROM is acceptable for them.

Other Types of Estimations

As I said earlier, the ROM is the most initial estimation for any project, and hence it can be +50% to -50% (PMBOK). Other estimates help the project stakeholders to know more about the cost variance later on.

Those estimates are;

Preliminary Estimate

Used once the project has started officially. Its accuracy is -15% to +50%.

Budget Estimate

Once the quantities are known, then it helps to estimate the project budget. It’s accuracy is -10% – +25%.

Definitive Estimate

When we have cost & the quantities both. It’s accuracy is -5% to +10%.

Final Estimate

It is just the final summary of the project. Its accuracy is +/- 0%.

Final Words

ROM Estimate is of the lowest level of hierarchy in estimation techniques, and it is to decide to take or leave any project for an organization. An expert with a good experience can only perform this.

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