7.2 Estimate Costs
Process Definition
Estimating costs is the process of taking the inputs shown in the figure below and creating a baseline approximation of assets required to complete the project.
Figure 19. Project Management Body of Knowledge Figure 7-4. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p. 195. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.
Process Assessment
It is crucial that several options or alternatives are included in the report especially if an extremely high cost estimate is provided in the report. Cost trade-off and risks should be figured into this as well. Cost estimates should be updated as required throughout the project life-cycle and reported on as appropriate.
(Inputs) Cost Management Plan
The cost management plan provides the guidance for the project team as to how project costs will be planned, structured and controlled. This example is from a group project in PMGT 501 Fundamentals of Project Management, written by Jeremy Curbey, Jay Kinser, and Charles Sutherland.
(Tools & Techniques) Three-Point Estimating
Three point estimating provides values for a single-point activity using three estimates to define a estimated range for an activities duration. This can help clarify the range of uncertainty of the estimated costs. This example is from a PERT calculation I did in PMGT 501 Fundamentals of Project Management.
(Outputs) Activities Cost Estimates
This example shows the cost of each activity from a group project in PMGT 501 Fundamentals of Project Management, created by Jeremy Curbey, Jay Kinser, and Charles Sutherland.