Critical Cost Estimating Factors

The cost estimating process associates an expected cost of performing work to each activity. Cost estimates can include labor, materials, equipment, and any other direct costs for project activities. Based on the activity resource and duration estimates, the cost estimates express the cost, normally in monetary amounts, of completing the work of the project. As with all project documents, the cost estimates can change throughout the project as conditions change. Different events can cause the cost for any activity to go up or down and require the cost estimates for the project to change. Table 3.11 shows the inputs, tools, techniques, and outputs for the cost estimating process.

Table 3.11. Cost Estimating Inputs, Tools, Techniques, and Outputs

Inputs	Tools and Techniques	Outputs
Enterprise environmental factors	Analogous estimating	Activity cost estimates
Organizational process assets	Determine resource cost rates	Activity cost estimates supporting detail
Project scope statement	Bottom-up estimating	Requested changes
Work breakdown structure	Parametric estimating	Cost management plan (updates)
WBS dictionary	Project management software
Project management plan	Vendor bid analysis
	Reserve analysis
	Cost of quality

Cost estimates are compiled into the project budget. The cost budgeting process aggregates the activity cost estimates into a single document for the project. The resulting project budget expands on the preliminary budget from the project charter and provides far more detail. Table 3.12 shows the inputs, tools, techniques, and outputs for the cost budgeting process.

Table 3.12. Cost Budgeting Inputs, Tools, Techniques, and Outputs

Inputs	Tools and Techniques	Outputs
Project scope statement	Cost aggregation	Cost baseline
Work breakdown structure	Reserve analysis	Project funding requirements
WBS dictionary	Parametric estimating	Cost management plan (updates)
Activity cost estimates	Funding limit reconciliation	Requested changes
Activity cost estimates supporting detail
Project schedule
Resource calendars
Contract
Cost management plan