'Estimating Project Costs' - Assignment Example

Cost is also the most important parameter of exclusive concern for higher level management, accountant, customer and other stakeholders of project and cost estimation is also performed during project planning phase. Appropriate cost estimation is very crucial for the successful development and delivery of project. It shall not only facilitate all resources allocated to the project but also an important factor for the client concern. That’s why this is Project Managers core responsibility to come up with realistic cost estimation for project considering all factors and dependencies in mind so that client can be provided with exact cost requirement of project and further allocations of resources can be made possible with cost requirement.

Now the question arise how is it possible to define good initial estimates of cost for any nature of project. Cost is the factor that has link with every entity of project like for any construction project it might be aggregate of cost related to construction material, machineries used for construction, cost of human resources(engineers, architects, labors, technician, plumber etc) and other costs. Another example is of software development project, costs associated with such nature of project shall be of infrastructure used for development, cost of human resources(business analyst, software developers, design architect, testers etc),critical computer resources, memory requirements and any other costs even cost of pizza or refreshments for team members.

Let’s discuss three estimation types that can be relied upon by Project Managers for defining initial estimates of cost for their project. At the initial level of project when requirements are not vivid it is difficult to come up with accurate initial estimates of cost and time. There is always possibility of uncertainty in