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• The process of developing an approximation of the monetary resources
needed to complete project activities. • Cost trade-offs and risks must be considered, such as make versus buy,
buy versus lease, and the sharing of resources. • The accuracy of a project estimate will increase as the project progresses
through project life cycle. Hence cost estimating is an iterative process. • This includes labor, materials, equipment, services, and facilities, as well
as special categories such as inflation allowance or contingency costs. 47 7.1 Estimate Costs
• Human Resource Plan: includes project staffing attributes, personnel
rates, and related rewards/recognition. • Risk register: to consider risk mitigation costs. • _______________ Estimating: uses the values of parameters, such as
scope, cost, budget, and duration or measures of scale such as size,
weight, and complexity, from a previous, similar project as the basis for
estimating the same parameter for a current project. • ________________ Estimating: uses a statistical relationship between
historical data and other variables (e.g., square footage in construction) to
calculate an estimate for activity parameters, such as cost, budget, and
duration. • Three-Point Estimates: (1) most likely (cM), (2) optimistic (cO), and (3)
– cE = (cO + 4cM + cP) / 6 • Reserve analysis: include contingency reserves to account for cost
uncertainty. May be a percentage of estimated cost or fixed number.
48 7.2 Determine Budget
• The process of aggregating the estimated costs of individual
activities or work packages to establish an authorized cost baseline. • Historical relationships: For analogous and parametric estimates,
the cost and estimation accuracy can vary widely. The strength of
historical relationship should be specified.
• Funding Limit Reconciliation: A variance between the funding limits
and the planned expenditures will sometimes necessitate the
rescheduling of work to level out the rate of expenditures.
49 7.2 Determine Budget
• Cost Performance Baseline: A time-phased __________________
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This document was uploaded on 01/28/2014.
- Fall '14