What is the difference between these two types of estimates and when is the best time to use one verses the other?
Rough order of Magnitude – What is it and when do I use it?
The ROM method of estimating is used when the project is in the very early stages and you are being asked to provide a quick and rough estimate very quickly. You do not have a lot of time to dive deep into your estimates, so you may end up with a low degree of accuracy. This means your estimate could vary in accuracy from as much as -25 to +75 per cent!
How do I do it?
There are two ways to product a ROM for your project. The first is historical and based on your company experience with other projects. Have you done any similar projects in the past? What was the outcome, duration, cost and lessons learned in those similar projects?
Second, what is the high-level or broad scope of the work that needs to be done, and the resources which may be required to do it?
Definitive estimates- What is it and when do I use it?
Definitive estimates are necessary when your Stakeholders require more detail and accuracy. You have the information and the time you need to put together a solid estimate.
Normally, you are further along in your project planning, and you have much more information on the scope of work and costs than in an ROM. As a result, your accuracy will be at a much higher level, somewhere between -5 to +10 per cent.
Here is a quick comparison which may help you remember each method: