Project Management: Achieving Competitive Advantage, Fifth Edition

Cost Estimation

1. LO 8.2 Apply common forms of cost estimation for project work, including ballpark estimates, definitive estimates, parametric estimates, and learning curve.

Estimating project costs is a challenging process that can resemble an art form as much as a science. Two important project principles that can almost be called laws are at work in cost estimation. First, the more clearly you define the project’s various costs in the beginning, the less chance there is of making estimating errors. Second, the more accurate your initial cost estimations, the greater the likelihood of preparing a project budget that accurately reflects reality for the project and the greater your chances of completing the project within budget estimates.