Cost Estimation

Cost estimation in project management is the process of forecasting all estimated costs within the project’s lifecycle. It involves predicting total cost based on various factors such as project scope, required resources, time frame, and other relevant parameters.

Cost estimation in project management is vital because it helps project managers and the PMO determine the financial feasibility of a project, allocate resources appropriately, and plan project budgets accurately. It is also useful for identifying potential cost overruns and taking corrective action to keep projects and portfolios on track.

pmo365 provides a centralised and secure, cloud-based resource for all project portfolio management information. As a result, data generated with our Cost Estimation app is based on the most accurate and up-to-date data available from all past and current projects. The integrated nature of pmo365 means that all new information automatically updates across the platform, saving your project managers valuable administrative time and ensuring all projections are based on the most reliable data available.

Cost estimation is crucial for project management as it helps project managers plan and allocate budgets, allocate resources, assess risks, monitor project costs, and communicate progress with stakeholders. Accurate cost estimation in project management is a key factor in successful project completion, and improves efficiency, reduces costs, and increases profitability.

Cost Estimation provides:

1. Budget Planning: helping project managers to accurately plan and allocate budgets. This lets project managers make the very best determination of how much funding is required to complete projects successfully – and ensure that they remain within budget.
2. Resource Allocation: helping project managers allocate project resources, such as labour and materials. Forecasting demand based on the most up-to-date and accurate data allows project managers to better predict the timing and delivery of resources.
3. Risk Assessment: facilitating the identification of risk, in conjunction with pmo365’s Risk Management tools, to better manage the potential for issues and potential cost overruns and the appropriate steps to mitigate them.
4. Project Visibility and Control: assisting project managers to monitor actual project costs and identify variances with baselines. pmo365 will issue timely notifications to the appropriate managers when required to keep projects within budget and on schedule.
5. Variation and Change Management: controlling requests for extra funds and budgets due to changes in the scope of a project or unforeseen issues. Allows project managers to plan for appropriate contingency or mitigation funds.