Cost estimation
Schedules dictate recourses requirements and expenditures on one hand side and conversely constraints on resources and working capital dictate schedules.
How to deal successfully with this conflict?
First estimating, budgeting and controlling costs are not exclusively concerns of the accountant. Costs are of concern of everyone in a project. Team members who best understand the work – from engineers to operators, it doesn’t matter who – must participate the estimating process. They are the experts who oversee the complexity of work and can break down it into work packages. They also know the interdependencies of work packages and the time for implementation. Work packages that best describe the scope and requirements of any specific task.
As one thing is commonly well known – the better objectives, scope and requirements are specified the more accurate are the cost estimates.
Professional cost estimates must meet the direct costs as well as the indirect costs and last but not least it must generate a reasonable profit. Many often the so-called indirect costs are more complex and hide risks; risks that are usually unknown.
It is also commonly known that cost estimates are mainly affected by the following
COMPETITION – COMPETITION – COMPETITION
In front of this background it is more important to start with a carefully done work breakdown structure, a scoping as detailed as much, research about resources and market conditions and deeply involvement of all knowledge carriers of the proect.
Download a cost management guide
Find detailed information on cost management for projects in the downloadable guide.