This is the second process of the cost management knowledge area. The process of developing an approximation of the monetary resources needed to complete the project activities. Following activities should be done as a part of this process.
- The cost of every activity is estimated by adding the cost of all the resources of an activity.
- Based on the organization policy calculate the cost of overhead, indirect cost, labor cost, material cost, services cost, etc.
- Document the assumptions, which are the basis of the estimation.
- Estimate the contingency reserve for the project, each milestone, phase.
We know from our experience that the money which we pay for using resources on our project are paid at a different time sometimes in advance of using resources, other times after using resources, and other times it may be prorated basis. This is another important thing we should keep in mind when we are estimating the resource cost. Although this is part of the next process, Determine Budget, but until we put the resource cost at the right place on the project timeline it will be a wrong approximation when we sum-up the cost for budgeting purposes.
Sometimes project managers need to estimate the cost of capital. So if required estimate also this cost for your project.
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Estimate Costs (Process Summary)
This table is based on PMBOK 6th Edition of PMI
- Enterprise Environmental Factors
- Organizational Process Assets
- Project Documents
- Project Management Plan
Tools & Techniques
- Analogous Estimating
- Bottom-Up Estimating
- Data Analysis
- Decision Making
- Parametric Estimating
- Project Management Information System
- Three-Point Estimating
- Expert Judgement