Chapter 14. PRICING AND ESTIMATING

Note

There are many activities associated with the planning of a project. Estimating the likely costs of all resources and work effort required to complete the project is a significant part of the planning process. There are several common techniques available for use in estimating project costs, activity duration, and project completion date and the project manager may use a combination of these techniques throughout the life cycle of the project. These techniques vary in application but the objective of the estimating process is to determine, within a desired degree of accuracy, the total cost to produce a product or project deliverable. The difficulty of estimating costs varies widely depending on the type of project, the experience level of the project team, the number and type of resources to be used, and whether or not similar projects have been completed that can be used for comparison and analogy. Estimating is basically a guess or an approximation of project costs or time durations and includes a risk assessment and in most cases an added contingency to address uncertainty.

Pricing is generally the process of determining the appropriate amount to bill or charge a client, customer, or receiver of a product or service. Pricing is considered to be a business decision and is associated with profitability, relationship with clients, the general target market and what the market will bear, availability of the product, difficulty to produce, availability ...

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