Estimate Costs process is exactly what you can think of when you read ‘Estimate Costs’!
This is the second Cost Management process in the Planning Process Group. Below is the PG-KA mapping,
From definition perspective, this is the process of estimating the funds required to complete the project activities.
But before you can estimate costs, you need to know who’s doing what work and how long it’ll take. Gathering this data is precisely the inputs of the Estimate Costs process.
As far as Tools and Techniques are concerned, you have already seen some of them in the schedule management knowledge area. They are listed below,
- Analogous Estimation
- Using similar previous projects
- Parametric Estimation
- Using a variable like LOC
- Three-Point Estimates – PERT Method
- P+4M+O / 6
- Reserve Analysis – Contingency Reserve and Management Reserve
- Contingency Reserves – Buffers for known-unknowns
- Management Reserves – Reserves for unknown-unknowns
A good question to ask here is – how can the same tools be applicable to both time and cost?
At the end of the day, you are estimating both time and cost in their respective processes. These techniques are estimating techniques and can thus be applied to both time as well as cost. However, note that not all techniques are same between these two knowledge areas.
If you take a real life example as well, you are often estimating to devote a certain amount of time and money to your personal projects. So it is obvious that some of the estimating techniques would overlap.
We have covered more Tools and Techniques of this process and you can check those out in Cost Management Knowledge Area