3 Major Outputs Of Estimate Costs For Projects
In my previous articles, I have talked about some of the tools and techniques that can be used when estimating the cost for projects. In this article, I want to look at the three major outputs of estimate costs for projects. Follow me as we look at that together in this article.
#1 Cost Estimates
Cost estimates include quantitative assessments of the probable costs required to complete project work, as well as contingency amounts to account for identified risks, and management reserves to cover unplanned work.
Cost estimates can be presented in summary form or in detail. Costs are estimated for all resources that are applied to the cost estimate. This includes direct labour, materials, equipment, services, facilities, information technology and special categories such as cost of financing (including interest charges), an inflation allowance, exchange rate or a cost contingency reserve, indirect costs, if they are included in the project estimate, can be included at the activity level or at higher levels.
#2 Basis of estimates
The amount and type of additional details supporting the cost estimate vary by application area. Regardless of the level of detail, the supporting documentation should provide a clear and complete understanding of how the cost estimation was derived.
Supporting details for cost estimation may include documentation of the basis of the estimate explaining how it was developed, documentation of all assumptions made, documentation of any known constraints. It also has documentation of identified risks included when estimating costs. It can also include an indication of the range of possible estimates to indicate that the item is expected to cost between a range of values as well as indications of the confidence level of the final estimates.
#3 Project Document Updates
Project documents that may be updated as a result of carrying out this process include:
Assumption log: During the cost estimates process, new assumptions may be made, new constraints may be identified, and existing assumptions or constraints may be revisited and changed. The assumptions log should be updated with this new information.
Lesson Learned Register: The lessons learned register can be updated with techniques that were efficient and effective in developing cost estimates.
Risk register: The risk register may be updated when appropriate risk responses are chosen and agreed upon during the Estimate cost process.
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