The accuracy of your cost estimation process can make or break project success.
One of the greatest challenges for a project leader is to successfully deliver on all aspects of a project both according to the client’s specifications and within the allotted budget. It is often the case that either one aspect or the other can be accomplished, but not necessarily both. When it comes to controlling costs, it is a critical first step to make appropriate estimations at the outset of a project. Being able to control costs is largely a matter of adhering to established guidelines, oftentimes by learning from previous projects and reacting to current circumstances efficiently and effectively.
Project cost estimation is a must. The initiatial estimation for any project equates to the budget, to the spend that the Project Board will agree and sign off. A typical cost estimation depending on the project includes:
Resource requirements [man hours] cost
Hardware and Software cost
Licenses cost
Workshop cost
Pilot cost [if applicable]
Training cost [if applicable]
Project Management cost [your effort]
The estimated cost must be at all times be monitored tracking costs vs actual costs. If there is a variation it needs to be explained, and if additional monies is required an Exception Report needs to be agreed and sign off by Sponsor, Stakeholders of the project.
Estimating cost is your budget.
