A basis of estimates template explains how project estimates were derived, providing the supporting detail behind schedule and cost figures that enables stakeholders to evaluate, trust, and act on the numbers. According to the Project Management Institute (PMI), transparent estimating is part of the Planning Performance Domain in PMBOK 8 — ensuring estimates are defensible, traceable, and understood by all stakeholders who rely on them for decisions. A well-completed basis of estimates template is what separates a credible project estimate from an unsupported number, and it forms the foundation for productive conversations about estimate accuracy, contingency requirements, and planning confidence. Without a basis of estimates template, organizations cannot systematically improve estimating accuracy because the assumptions and techniques behind historical estimates are undocumented and therefore lost.

What is a Basis of Estimates?

A basis of estimates template is a supporting document that captures the rationale, assumptions, techniques, data sources, and confidence ranges used to develop project cost and schedule estimates. It provides the context needed to interpret estimates correctly, identifies what is and is not included, and documents the risks incorporated as contingency reserves versus those remaining as residual uncertainty. The basis of estimates is developed alongside the schedule and cost estimates and stored with the project baseline documentation. When variances occur during execution, the basis of estimates template is the reference document for understanding whether the variance results from incorrect assumptions, changed scope, or execution problems — information essential for effective corrective action planning. In PMBOK 8, the basis of estimates template applies to duration, cost, and resource quantity estimates across all project work packages and phases.

What's Included in This Basis of Estimates Template?

• Estimating Approach Summary — The primary estimating method selected (analogous, parametric, three-point PERT, or bottom-up) with the rationale for selection and the conditions under which the method is most and least reliable for this project context.
• Estimating Assumptions — Key premises accepted as true during estimating, including assumed productivity rates, resource skill levels, technology availability, scope completeness assumptions, and working hour definitions that, if wrong, would materially affect the estimates.
• Estimating Constraints — Limitations that shaped the estimates, including fixed deadlines requiring resource loading assumptions, budget caps requiring scope trade-off decisions, and technology constraints that affected the choice of estimating methodology or data sources.
• Estimate Detail by Work Package — Labor hours, material costs, equipment costs, and other direct costs for each WBS work package, with the data source or calculation basis for each line item documented to support future variance analysis and audit requirements.
• Confidence Level and Accuracy Ranges — Statistical range for the estimate (e.g., -10%/+25% at 80% confidence) based on scope definition maturity, the estimating technique used, and historical accuracy data for comparable projects performed by the organization.
• Known Risks Included as Contingency — Specific identified risks for which contingency reserves have been included, with the reserve amount, the risk it covers, and the basis for the contingency calculation documented to enable reserve management during execution.
• Exclusions — Items explicitly not included in the estimate with the rationale for exclusion, preventing scope gaps from being misinterpreted as intentional cost reductions and ensuring stakeholders understand what additional funding may be required.

How to Use This Basis of Estimates Template (PMBOK 8)

1. Complete alongside the schedule and cost estimates — Develop the basis of estimates template simultaneously with the estimates themselves, not reconstructed afterward. Real-time documentation captures the actual assumptions made rather than a post-hoc rationalization of the resulting numbers.
2. Document the technique for each major category — Different work packages may use different estimating techniques based on available information. Document which technique was used for each category and why that technique was most appropriate given the available data and scope definition maturity.
3. Include the confidence range to set stakeholder expectations — Always present estimates with their accuracy range rather than as point values. A range of -10%/+25% communicates fundamentally different information than the mid-point alone and enables appropriate contingency reserve planning.
4. Store with the project baseline for variance analysis — File the completed basis of estimates template with the approved project baseline so it is readily available when schedule or cost variances occur and root cause analysis is needed to determine appropriate corrective actions.
5. Update when estimates are revised after approved changes — Every approved change request that affects estimates should trigger an update to the basis of estimates template reflecting new assumptions, techniques, or data sources used in the revised figures.

When to Create This Document (PMBOK 8)

The basis of estimates template is created during the Planning Performance Domain, alongside schedule and cost estimation activities. In PMBOK 8, it is a required supporting document for the cost and schedule baselines, providing the narrative context that makes them meaningful and auditable. The basis of estimates is reviewed during change control processes and is a primary input to lessons learned about estimating accuracy at project closure.

Related Templates

• Project Management Plan Template
• Schedule Data Template
• Work Performance Information Template
• Risk Management Plan Template
• Project Funding Requirements Template