Examining the Cost Estimate

Once all of the inputs have been evaluated and the estimate creation process is completed, you get, of course, the cost estimate. The estimate is the likely cost of the project—it's not a guarantee, so there is usually a modifier—sometimes called an acceptable range of variance. That's the plus/minus qualifier on the estimate, for example $450,000 +25,000 to -$13,000, based on whatever conditions are attached to the estimate. The cost estimate should, at the minimum, include the likely costs for all of the following:

• Facilities

• Information technology

• Special categories, such as inflation and contingency reserve

It's possible for a project to have other cost categories, such as consultants, outsourced solutions, and others, but the preceding list is the most common. Consider this list when studying to pass your exam.

Along with the cost estimate, the project management team includes the basis of the estimate. These are all the supporting details of how the estimate was created and why the confidence in the estimate exists at the level it does. Supporting details typically include all of the following:

• Description of the work to be completed in consideration of the cost estimate

• Explanation of how the estimate was created

• What assumptions were used during the estimate creation

• The constraints that the project management team had to consider when creating the cost estimate

Project Management Made Easy

Project Management Made Easy

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.

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