![]() ![]() Whilst cost estimating operates at the level of activities, cost budgeting aggregates these figures at the project level to produce a cost baseline and the project funding requirements. ![]() If the project sponsor is happy to accept this initial estimate, then why bother? The key word here is 'initial', you should be able to narrow this down without too much effort when you have more experience and more data to work with. The benefit gained from narrowing this down needs to be factored against the additional time (and cost) it would take to do so. For example, an initial estimate may suggest a figure of between $50,000 and $75,000 for a particular part of the project. On the subject of accuracy, you will need to decide just how accurate the estimates need to be. In fact, providing very specific cost estimates to the sponsor can hide the fact that you are basing them on scope, resource and productivity figures that are themselves likely to be revised in the light of experience. There is no point in working out costs to the nearest dollar if you are not clear about these things. What are the most significant factors that could affect this estimate? How accurate is the resource availability assumption?Ĥ. How accurate are the expected productivity rates?ģ. There are five questions project managers should ask about every estimate as they define and manage their projects:Ģ. In common with many of the processes in project management, cost estimation is an iterative process and the more work that is done and the more experience that is gained the more accurate the estimates of future work will become.Įven projects with acceptable initial estimates are doomed to overrun cost and schedule budgets if they are not guided by rules of thumb and rigorous estimates-to-complete. Even where this is not the case the project manager should document all of the supporting information that went into the cost estimates in order to justify their decisions if these are challenged later on. In addition, in some project environments, the project manager may have a legal responsibility for ensuring that cost estimates are prepared properly. One of the keys to successful project completion is an accurate cost estimate and a realistic risk assessment. Experience suggests that projects launched without an accurate initial estimate are far more likely to experience serious problems than those where sound estimates were made. Project managers make many of their day-to-day decisions based on estimates and the accuracy of these can have a big influence on the outcome of the project. The first step in managing project costs is to answer the questions: 'How much will the project cost?' and 'How accurate is this estimate?' It relies on other planning processes like scope management and resource allocation being done effectively. Managing project costs involves defining the total cost of the project, securing a budget and then making sure that it is delivered within that approved budget. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |