Which Are The Best Techniques For Project Cost Estimating?
Posted by Rushellkayna on June 16th, 2020
Lots and tons of managers find the task of project cost estimating quite intimidating and tedious. The project managers of a few companies work hard to create that perfect estimation plan. Finally, many of them end up facing a fiasco. The reason is that often the costs of their project exceed their intended budget somewhat. Well, the fact is Engineering Cost Analysis can lead to making a quick estimation of your project cost, but not ultimately.
What’s the other positive alternative?
Just the way of being able to make a final project can be quite ecstatic. Doing the same is not so easy. That’s why it becomes necessary to utilize some of the best tools and techniques to yield the best results. The reason is that project managers have to face different types of unpredictable situations about possibilities, resources, and timing. The best way to overcome such situations is by optimizing the current circumstances to predict probable future costs.
This is because it’s always better to have a clear understanding of your project cost estimation from the beginning. In case you don’t do that, you might end up facing adverse situations later on. So, here are some of the useful tools and techniques for you to consider. By optimizing each of them effectively, you can make a flawless estimation of your project cost.
1. Bottom-up Estimation
The bottom-up estimation is a unique technique of estimating your project cost. It includes the creation of an estimate from the lower to the higher level. This starts from a work package according to the WBS protocol. Then the estimation stoops up to increase to higher levels in a step by step manner. It is an advantageous estimation technique and yields accurate results when estimating from the lowermost level.
2. Parametric Estimation
If you want to calculate the cost of a particular activity by using an algorithm, then parametric estimation must be your choice. It helps you to analyze and evaluate the value of that activity by considering its project variables and historical data. It is almost like a statistical relationship that has to be calculated between both these components effectively. You can use this technique either for the entire project or a few activities related to that.
Are you someone who wants to reap of impeccable results from your project cost estimation? If yes, then the technique of parametric estimation is the right option for you.
3. Advice from adepts
Before you begin estimating your project cost, you must seek valuable suggestions from knowledgeable adepts first. These people can provide you the best guidance as they deal with similar types of projects all the time. If required, they will even give some unique ideas and suggestions to have you make a flawless project cost estimation. What’s more, you can also seek beneficial tips from them about using some useful tools and techniques for added advantage.
4. The technique of group decision making
This particular technique includes a group of specific people responsible for formulating the estimation of your project cost collectively. The reason is the more the team members are; the more detailed and impeccable the evaluation is going to be. Working together also means the development of a strong sense of commitment to finish the work within the specified deadline. If you wish, you can either execute this technique on your team solo or other methods.
So, which of these two strategies will you apply to estimate the cost of your project? Well, this is a question whose answer will depend entirely on the actual type of your project.
5. Do consider reserve analysis.
The tool of reserve analysis is also known as a contingency reserve and lets you distribute a new fund during indefinite situations. This particular strategy comprises an essential part of your cost baseline. Do you know why? That is because it helps you to address and formulate suitable solutions for the possible risks of a likely scenario.
Unlike the contingency reserve, the management reserve also forms a crucial part of your project cost estimation. It involves the evaluation of a certain amount to settle a few probable unknown risks taking place in the future. Besides, management reserve is not a part of your cost baseline but is an indispensable part of your project cost estimation. Both the funds are equally beneficial to ensure an error-free creation of your project cost estimation.
While contingency reserve is under the project manager’s clutches, the management reserve requires the project manager to get the sponsors’ permission. So, are you all set and ready to estimate the project cost of your company? If yes, then, some of the tools and techniques mentioned above can help you quickly and accurately.Also See: Project Cost, Cost Estimation, Project Managers, Management Reserve, Reserve, Project, Estimation
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