## What Is a Project Cost Estimates?

Cost estimating is important so you are able to expect or anticipate what are the different factors that are relevant to completing the project as well as its corresponding cost. This will also help you determine if the possible is feasible enough to carry on, or should action be taken in order to secure the budget that will meet the costs. A project cost estimate is a process of taking into account all those factors, calculating the budget that would connect the financial commitment that will eventually complete the project.

## How To Create Project Cost Estimates?

There are a lot of things to consider when preparing cost estimates for your project. The more complex they are such as construction projects, the more detailed it becomes. This would entail a lot of comparison and research, requesting proposals or quotations from vendors or suppliers. So at the start, you need to exactly know what factors would contribute or perhaps affect your project. Let us tackle more about that so you may have an idea of how to create a well-crafted project cost estimate.

### I. Cost Categories

Now each project has different factors or elements that are needed for completion. But generally, the simplest classification divides costs into two categories which are direct and indirect costs. Direct costs are those factors that are readily anticipated by any sort of project. For instance, in a construction project, fuel is needed to operate heavy equipment so this is something expected. As for indirect costs, these factors are not associated directly with the same cost centers. Examples of these are utilities, security, quality control and etc. all these are generally shared by not just one project and are billable to any one project.

### II. Other Common Project Expenses

There are several common project expenses that are to be expected on several projects such as labor costs, materials, rental or buying of equipment, services, hardware or software, use of facilities, and those for contingency plans.

### III. Purpose

After understanding the different categories of costs and other common expenses, it’s time to define the purpose of the estimates that you are preparing and its overall scope. This will help you identify what needs to be accomplished.

### IV. Data

Gathering and analyzing data and information is quite important to help you formulate the right cost estimates for the project.

### V. Expect Adjustments To be Made

As the project progresses, expect the cost estimates to be an ongoing process as well. Estimate revisions are normal to ensure accuracy throughout the project execution. Another major factor that affects revisions is the unexpected costs which can happen at any time. You may or may not have anticipated it, but regardless this will create a sort of impact on your project.

### VI. Cost Estimate Techniques

There are several cost estimate techniques you can opt to use to make it easier to do, the common techniques are:

• Bottom-Up Estimating is where you use estimates of individual tasks then add those all up to determine the overall project costs.
• Analogous Estimating or historical costing is the use of previous data. If an organization has had similar projects before, it becomes easier to draw parallels between project deliverables and their associated costs.
• Statistical Modeling or parametric estimating techniques is used to create highly accurate estimates using unit costs.

## What Makes a Good Estimate?

Several characteristics would include accuracy, precision, detailing the risk, credibility, and reliability.

## What Are the Responsibilities of a Project Manager?

A project manager is responsible for planning, executing, monitoring, controlling, and closing projects. Overall they are in charge of delivering the project to completion.

## What Is Project Management?

This is the process of planning and executing projects. This would include identifying and managing the lifecycle, applying the design process, formulating the project team, and efficiently guiding the team through all phases until project completion.

When creating a project cost estimate, you need to have the best tools out there to help you. Download our free templates above to help calculate a more accurate budget that will ensure the steady completion of your project plans.