Cost Estimating Checklist

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Cost Estimates

Definition: Cost estimates are quantitative assessments of the likely costs of the resources required to complete project activities. They may be presented in summary or in detail. Costs must be estimated for all resources that will be charged to the project. This includes, but is not limited to, labor, materials, supplies, and special categories such as an inflation allowance or cost reserve. Cost estimates are generally expressed in units of currency (dollars, euros, yen, etc.) to facilitate comparisons both within and across projects. In some cases, the estimator may use units of measure to estimate cost, such as staff hours or staff days, along with their cost estimates to facilitate appropriate management control. Cost estimating generally includes considering appropriate risk response planning, such as contingency plans.

Acceptance Level:  Generally accepted

Alternative or Related Terms: Cost approximation

Application Areas/Intended Uses: Cost estimates are an input into the cost budgeting process.

Chief Advantages: Cost estimates are essential to development of budget allocations for specific project activities and the establishment of the cost baseline used to measure project performance.

Additional Reading:
Estimating to Minimize Loss. Ken West. PM Network, April 2001, 42-45.
Negotiating Realistic Estimates. George Pitagorsky. PM Network, August, 2000, 53-56.
Secrets to Creating the Elusive “Accurate Estimate.” Neal S. Gray. PM Network, August 2001, 54-57.
The Price Is Not Always Right. Willian T. Pepoon. PM Network, May 1999, 53-55.
True Estimates Reduce Project Risk. Mark R. Durrenberger. PM Network, May 1999, 45-48.
Why Chris Can't Estimate. [Practitioner Q & A] William R. Duncan. PM Network, October 1999, 25-26.
You Can't Negotiate Cost. Mark Durrenberger. PM Network, September 2000, 65-66.