PMP Referenced Question 8: Estimating Costs for an Agile Project Business Case
This PMP-style scenario explores how to perform early cost estimation for a project that will use an Agile delivery framework. It emphasizes PMI’s preference for analogous estimation methods when scope is not yet detailed.
📘 Scenario
A project manager has been assigned to a new project that will be delivered using an agile framework. The sponsor is asking for a cost estimation to build the business case.
❓ Question
What should the project manager do?
- A. Ensure the client representative is involved in the estimation.
- B. Ensure that a 20% contingency is included in the estimation.
- C. Review the completion costs of similar projects.
- D. Review the lessons learned from similar projects.
✅ Correct Answer: C. Review the completion costs of similar projects
- 📊 Agile projects use **progressive elaboration** — detailed estimates come later.
- 🧠 In early stages, **analogous estimating** is most appropriate — based on past similar efforts.
- 📑 This helps sponsors assess feasibility **before** backlog details are available.
✔ Why Option C is Correct
In Agile, early business case cost estimates rely on high-level comparisons to similar completed projects. This method provides reliable, fast input when detailed scope and backlog sizing are still evolving.
✖ Why Other Options Are Incorrect
- A. Client involvement is important during backlog refinement, but **not essential** for initial cost estimation.
- B. Arbitrarily adding 20% contingency is not a best practice. It lacks justification and precision.
- D. Lessons learned provide qualitative insights, but not quantitative cost data.
📌 Key Takeaway
When sponsors request cost estimates early in an Agile project, use **analogous estimates** based on prior projects. It’s accurate enough for business decisions while allowing Agile flexibility during delivery.
PMP candidates should understand how estimation evolves in Agile projects. For business case development, analogous estimates based on similar efforts are the PMI-recommended approach.