The organizational process assets that influence the Estimate Cost process include but are not limited to:
• Cost estimating policies. An organization may have predefined approaches to cost estimating. Where these exist, the project operates within the boundaries defined by these policies.
• Cost estimating templates. An organization may have developed templates (or a pro forma standard) for use by the project team. The organization can continuously improve the template based on its application and usefulness in prior projects.
• Historical information. Documents and data on prior projects including project files, records, correspondence, closed contracts, and closed projects, obtained from various sources within the organization, can influence the cost of the project.
• Project files. Organizations involved in the project may maintain records of previous project performance that are detailed enough to aid in developing cost estimates. In some organizations, individual team members may maintain such records.
• Project team knowledge. Members of the project team may recall previous actual costs or cost estimates. While such recollections can be useful, they are generally far less reliable than documented performance.
• Lessons learned. Lessons learned could include cost estimates obtained from previous projects that are similar in scope and size.
• Resource cost rates. The person determining the rates or the group preparing the estimates should use the unit cost rates (such as staff cost per hour or bulk material cost per cubic yard) for each resource to estimate activity costs. Gathering quotes (Section 12.2) is one method of obtaining rates. For products, services, or results to be obtained under contract, standard rates with escalation factors can be included in the contract. Obtaining data from commercial databases and seller published price lists is another source of cost rates. If the actual rates are not known, then the rates will need to be estimated.
• Basic assumptions. One basic assumption that needs to be made when estimating project costs is whether the estimates will be limited to direct project costs only or whether the estimates will also include indirect costs. Indirect costs are those costs that cannot be directly traced to a specific project and therefore will be accumulated and allocated equitably over multiple projects by some approved and documented accounting procedure. Great care should be exercised to exclude the inappropriate application of indirect costs to projects within an organization. When a decision is made to include or exclude indirect costs in the project estimate, the same approach needs to be applied consistently to the cost estimate, the project budget, and the monitoring and control of actual costs.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.