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PMP Certification All-in-One For Dummies, 2nd Edition by Cynthia Snyder

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Chapter 1: Estimating the Price Tag

Exam Objective

arrow.png Using cost-estimating techniques, develop a budget based on the project scope in order to manage project cost.

Project cost is one of the most sensitive areas of your project. Your sponsor and customer are very concerned with cost estimates, total budget, and the flow of funding. They will want to find ways to minimize costs while maximizing quality and reducing the schedule, yet not giving up scope. Remember, customers generally want more scope, faster and for less cost.

Your job is to resist the pressure to give overly optimistic estimates. You need to make sure that your team has the time to define the scope in enough detail that you can develop accurate cost estimates. In addition, you need to make sure you have sufficient time to plan and estimate your costs, and that you understand the uncertainty associated with the cost estimates and budget. This includes estimating the funding needed to account for uncertainty, undefined scope, project changes, and unplanned in-scope work. None of this is easy, but all of it is important. More than any other objective, in the short term, the success of the project is judged by your ability to deliver on budget as well as in the time allotted.

If you’ve already read Book III, Chapter 3, many of the techniques used to estimate costs will seem familiar to you: They’re the same ones used ...

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