In a country of limited funds, as a project manager, you continuously think about how to obtain more and more return investment. The more exact your project Cost Estimation reach, the better you will be able to control your project cost budget. So, it’s better to estimate the project cost and there are so many reasons for doing this, some of them are:

• It allows you to gain anticipated advantages against expected costs to watch whether the management of project makes sense or not.
• It enables you to watch necessary funds that are available to carry on the project.
• It provides guidelines just to help and make sure that you do have sufficient fund for completing the given project.
• Although, you do not require to develop and monitor detailed budget with full detail information for your entire projects.

For becoming a good project manager, you have to know about how to engage with project cost and also have to increase your project success chances.

For this know must know what is a project budget? How to engage it? It is given as full information about little-little things; time phases that estimate all of your resources cost for the project. You are usually able to create a budget in various stages, Approved project budget from a primary rough value to a full detailed estimate lastly to complete the project. On the occasion time, you might also revise your standard project although when your working project is in progress.

Budget of the project cost comprise both indirect and direct cost

Following are the list that was Included in direct costs:

• Specific materials, types of equipment, and supplies for your working of the project
• Salaries that to be given to members of the team
• Travel different places to work on your project
• Subcontracts that provide very good support to your project cost

Indirect cost comes in two different categories

Overhead Cost: All costs for services and products for your costs project estimation those are really hard to allocate and subdivide directly. Some examples of this are office space rent, fixtures, general supplies, cost of furniture as well as other equipment.

You require a staff and office to do some work and help on your activities of the project, as well as office space charges money. But, your Association has a yearly lease for the office space charge. The space also has many single offices also many work areas for doing project work there are many people works on their project over the years. As you don’t have any clear records that clear the dollar amount of overall rent that you merely spend your time in working office on project activities, the space of your office also comes under in indirect cost.

Administrative and general cost: The expenditures that keep in your association operational. To perform any project, you need to have an organization without any existence of organization no one is able to work on the project. Say for example finance department, salaries of contract department, top management, and general accounting fees as well as legal services. Think about planning to develop, design, as well as to produce a brochure of the company.

Direct cost includes:

• Materials- The material used in the project like special paper collection for brochure.
• Travel- The traveling cost that is taking in investigating firms that might design and develop your overall brochure.
• Subcontract- It includes the cost of outside company services to design a cover art.

Indirect cost includes:

• Rent – The cost of the office space for you utilizes when you develop the photocopy of brochure this cost a good amount.
• Employee’s Benefits – Benefits given to the employees such as holiday leave, annual leave and also sick leave, life, and health insurance also some plans for the retirement time additionally to the salary when you and your members of the staff working in making the brochure.
• Equipment – For the copy of the brochure you must use a computer to compose it.
• Administrative and management salaries – Salary portion is important to give staff managers and upper managers who are doing administrative works significantly to remain the functioning of your project.

Project cost estimation means to examine the project cost, updates in the enterprise, and supplies of the project. These analytics generally conducted through software and at least a process set for reporting and researching. The modes of cost estimation are usually and very popularly known as process management systems and sector of data and so many types, that any company can utilize on the basis of their needs in models of their business. These models have natural length however it comes with some weakness that stands them in a situation like there they felt very hard to use it.

Advantages of project cost estimation

• Flexible calculation area – Project cost models naturally interprets costs. Many people use an array of algorithmic designs values to some factors just to compute costs. Some different models include specialized judgment model as well as analogy estimation.
• Cost control and efficiency – Meaning of efficiency stands like completing the task in less time and very efficiently on time accurately, this safe the business much money and precious time. When the exact model gets selected, the enterprise realizes that it can achieve from efficiency with the help by using cost estimation to calculate expenses fast and after that can make an option for funding on projects, by choosing some suppliers and other activities.
• Variable factors – In a complete world, the factor remains stable as well as models of cost estimation always give an accurate result. Badly, all markets are in continuing flux, technology and prices change is constantly moving forward and onward. This reason leads to change continuously in price that means value are keep changing and the price instantly increasing. In standard models it leads to a drain on time.
• Subjectivity – Project cost estimation is sometime subjective. Also with models of algorithmic, it typically depends on the business to load on some values among all and have to assign correct factors and values. The secondary option of a model is more subjective than that. Means many times it was there mistake of the manager also just as simply make to utilize the cost estimation model without testing it.
• Simplicity – It is one of the biggest benefits of estimate cost and also it is extremely easy to understand. The cost profit is much easier to watch. So that anyone can easily understand the nature of monetary in a project also the question of their continuance.

Disadvantages of project cost estimation

Rising subjectivity for benefits and intangible cost- it is the major cons of estimation because of subjectivity amount involved in the process of quantifying, identifying, as well as estimating several benefits and costs. As many advantages and cost are nature of non- monetary like the satisfaction of the employees, increase in client’s satisfaction.

They always need one to assign a subjectively monetary value for the purpose of calculating the total cost as compared to overall financial advantage of particular Endeavor. The forecasting and estimations are always found on past expectations and experience. These results of subjectivity can result to misleading and inaccurate cost.

Process of cost estimation

1. To better understand the result or output of the cost estimation. It is a very necessary tool or equipment that can make heavy effect on budgeting and planning of a project. As there are so many numbers of earning resources for a project is available, and also the requirements and features of document cannot be count in the final product. At the starting of a project the estimation process starts then it will assist you to know among all which feature as a needed document include resource constraints for example time. Prioritization of the requirements is to make sure the necessity of the important feature available in the product.

1. If the beneficial feature of a project detected at the beginning than the project risk is reduced as the project complexity increases according to its shape and size, that means as the progress increases the mistake opportunity increases. Therefore, effect of cost estimation is having an extremely massive crash on the schedule and lifecycle for a project.

3. It is a great impact on allocation of resources. It is carefully allocated for a company to search for better resources, like more experienced personnel projects to costly projects. The term manpower loading is used to calculate the sum of management personnel, engineering allocated towards the project in under given time limit.
4. In many occasions, it becomes so worse for a company if their expensive project fails in place of the low project cost. When the equipment is used for management, developers and estimations can also experiment along with trading off few factors or resources while remain project cost constant. Just for example single trade off might can be more invest in a huge powerful integrated environment development so that the amount of personnel working on a project can also be reduced. The cost estimation has an enormous impact on management and project planning.

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