CAPM (Certified Associate in Project Management) Practice Exam

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What is a rough order of magnitude estimate?

A precise estimate used at project completion
An estimate used during project initiation with a range of -25% to +75%
A budget estimate for high-risk projects
A financial calculation for small projects only

The correct answer is: An estimate used during project initiation with a range of -25% to +75%

A rough order of magnitude estimate is used during the project initiation phase to provide a broad understanding of the potential costs involved in a project. It is typically an early and approximate estimate with a wide range of -25% to +75% to account for uncertainties and risks. This type of estimate helps in providing stakeholders with a general idea of the project's scope and potential costs before more detailed estimates can be developed. Option A is incorrect because a rough order of magnitude estimate is not a precise estimate used at project completion; rather, it is an early estimate used during project initiation. Option C is incorrect as a rough order of magnitude estimate is not specifically a budget estimate for high-risk projects; it is a preliminary estimate used to get an idea of the project's potential costs. Option D is incorrect because a rough order of magnitude estimate is not limited to financial calculations for small projects only; it can be used for projects of various sizes to provide an initial cost estimate.