Introduction
Cost estimation is a project management technique that involves forecasting the future resources a project will require to ensure they are available when the project starts to maximize the opportunity for the project to achieve its goals. More specifically, the technique informs that project is appropriately budgeted, staffed, and executed, which significantly increases the chances of practical implementations of the projects. Cost estimation can also be conceptualized as the process of forecasting all the labor resources and expenditures required for the fast and effective implementation of different project activities to guarantee the project generates the expected results within the appropriate time limits and budget. Project management underrates this technique despite being critical for project success. This paper evaluates the importance of cost estimation to provide information on how it can be applied in project management and reviews its advantages and disadvantages. Cost estimation techniques are essential to constructing accurate total costs for the project, including the opportunity costs of appointing and executing the project.
Overview of Cost Estimating
Cost estimation is a crucial technique in project management that significantly impacts the project's consistent execution over time. Typically, it is normal for novel projects to differ from previously constructed tasks. Also, different organizations require new endeavors projects, and as a result, cost estimation becomes progressively difficult and complicated. Despite this challenge, the total costs from project understatements stand to be considerably greater than those from cost overstatements. As such, estimating task costs continues to be one of the central values delivered by project managersr. It entails calculating the labor cost, expenses, as well as total purchasing costs for subcontractors and suppliers. It can also be defined as an approximation of project expenses entailed to attain the intended quality deliverables (Permyakova et al., 2019). Cost estimation serves to improve financial feasibility when initiating new projects in publicly funded and privately owned projects. In such cases, cost estimation techniques provide services such as forecasting, obligaatory criteria, and information aggregation to ensure economical, consistent, rational, and communicable cost estimates. However, it is still possible to achieve cost savings devoid of standardized practices if enough information is used efficiently to execute cost forecasting based on the operation to achieve successfully (Chen et al., 2022). Therefore, it is vital to engage the stakeholders (organization executives, project managers, and technicians) during the project's early planning phases to guarantee collaborativend rational and high-quality decision-making.
In-depth Analysis of Cost Estimating Technique
The functionality point method prioritizes the possible solutions to the project needs by delineating, describing, and appointing each application's functional features as well as their synchronicities. Guided by the use case, the appropropriate result is produced by appraising the required time and cost for the application's deployment. Offsetting the product's cost from the agile team's cost contributes to initial expenses estimates derivation. This helps to achieve fundamental deployment modalities of the solution as well as high-level technical architecture as well as the design (Ancic et al., 2018). Ideally, this method employs constant verification of programming code to ensure continuous integration and delivery. It can be used in projects that require the solution to be delivered two to four times a year. Other cost estimation techniques include comparative estimating, resource-cost estimating, and cost-item estimating. The choice of technique is informed by several factors including style guide, initial program shape and modifiability, organization structure, control and communication among functional groups, and team expertise (Permyakova et al., 2019). The techniques can also be derived from the team's individual judgment concerning the relevant data on similar projects.
Pros and Cons
Despite the many advantages of the cost estimation technique, it overmarks the risks involved in the undertakings to balance the project time and costs. One of the cons of the method is that people will always know more than the group. This company-wide phenomenon poses higher chances of innovative undertakings being underestimated or overestimated likely, thus creating a tense geopolitical landscape. It can also provoke distrust among the stakeholders and decrease the next collaborative endeavor for collective estimation. Other disadvantages of cost estimation include the likelihood for conflicts to emerge from expectations that are increasingly inaccurate concern
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