COMMENT ON THIS EITHER YOU ARE AGREE OR DISAGREE IN 250 WORDS.
The process of estimating costs is vital for budgeting and keeping projects on track (Heldman, 2013, p. 208). It provides cost information for work required in each schedule activity, such as: resources, material, supplies, labour, equipment, facilities, services, maintenance, post project support, financing and also indirect costs (Snyder, 2013).
According to PMBOK (PMI, 2013, p.193), the “ability to influence cost is greatest at the early stages of the project, making early scope definition critical”. If for some reason the scope is not clearly defined early on, say in some ‘extreme’ projects, it will be extremely difficult to accurately estimate costs (Heldman, 2013, p. 52). Therefore cost estimations may need to be revised whenever a change to the project is applied.
In smaller not overly complicated scope projects, the process might be carried out relatively quickly by one person (PMI, 2013). For a skilled Project Manager, as you can imagine, this could be a simple task. But for someone not so proficient in numbers or generally inexperienced, it could be a challenge. For larger projects, on the other hand, the task may need to be delegated to a team of people and take considerably longer. Also the process may need to involve other departments, such as Procurement, Human Resources or Finance (Heldman, 2013, p. 52). Heldman (2013) also advises that most stakeholders have an interest in cost estimations, so they may intentionally or unintentionally impart certain pressures on the estimating team. These all incorporate the challenges of managing people, their expectations and communication.
Snyder (2013) recommends using a Cost Estimating Worksheet to help create an accurate cost estimate for each work package in the work breakdown structure. Methods to help ensure these estimates are accurate may include using quantitative analysis (such as analogous estimates, three-point estimation or parametric estimates), meetings or expert judgement (Snyder, 2013).
Ensuring all of the inputs into the process (such as information about the project scope, schedule, HR requirements and any potential risks and their effects) are prepared as thoroughly as possible will give the Project manager access to comprehensive information and minimize the likelihood of later surprises. Finally, a control system to manage the costs of the project throughout, may help to maintain cost accuracy.