Which method is the best to adopt while carrying out cost estimation of a new project?
It depend on the type of project, the reason for the estimation and whether the project design is fully developed or not. In case it is a construction project, the scope is fully developed and you wanna know the detailed cost to build it, detailed estimation is better. In case the scope is not very well defined analogous or parametric.
If you are trying to estimate the cost of a new project, at first you should recognize the main stakeholders and define the right scope of the project. After that, you should devise the WBS based on their requirements and define the main activities using teams that have experiences in that field. Then, define the resources for each activity and the cost of them considering the resources and the amount of work which is needed for each one. finally you can estimate the cost of each deliverable based on the WBS.
Moreover, Earned Value Method (EVM) is so workable for analyzing and estimating the cost of a project and there is a standard method for that by PMI. In the attachment you can find a file that can be helpful for you. If you have any question about that don't hesitate to message me.
Celso Santos
Behzad Maleki Vishkaei Thankyou for your valuable feedback! Looking forward to explore more and share!
Financial forecasting and using any historical information in the event that a similar project has been previously managed and closed. Interview stakeholders and subject matter experts (SMEs). You can have a variety of estimates, in order from least accurate, to most accurate: rough order of magnitude (ROM), budget estimate (using scope), and definitive estimate which involves going "bottom-up" breaking down each segment in the WBS. These are either analogous (using expert judgement) or parametric (using data and regression analysis).
Traditional methods have problems of high failure rates. I suggest to incorporate other elements, such as project complexity, team seniority, or intermediate lead-times as parameters to build prediction models for project costs.
Thankyou Monica S Spychala and Sanderson César Macêdo Barbalho for both of your feedback.
I guess for a totally new project with no reference, finding cost estimates becomes quite a challenge. Also I guess once a project closes; a gap analysis can accurately portray where our estimates turned out wrong and we can use that analysis very productively for future projects.
You can use several deterministic techniques such as analogous, parametric, bottom up estimates or you can use a probabilistic approach using PERT which provides broader estimates. The easiest way could be the analogous, but the level of details is low and it is also hard to find similar projects as they are unique. I hope it helps.
El método de estimación de costos del proyecto dependerá de su grado de definición. Si el proyecto se encuentra en las etapas iniciales de maduración, lo mejor será usar un método paramétrico, pero si el proyecto ya esta en finalizando su etapa de definición lo mejor sería usar un método más detallado, como por ejemplo "Bottom-Up"
ERP systems come by offering a variety of integrated solutions that support all specific aspects of the construction business from planning, project control, to costs and revenues
- Badges
- Science method
- Similar topics
- Teaching