Estimating is an essential part of project management, since it becomes the baseline for subsequent cost control. If the estimate for a project is too low, a company may well lose money in the execution of the work. If the estimate is too high, the company may well lose the contract due to overpricing.

As explained in the section on work breakdown structures (see p. 42), there are two basic methods of estimating: top down and bottom up. However, unfortunately in only a few situations are the costs available in a form for simply slotting into the work package boxes. It is necessary therefore to produce realistic estimates of each package and indeed the entire project before a meaningful cost estimate can be carried out. In most estimates which require any reasonable degree of accuracy the method used must be bottom up. This principle is used in bills of quantities which literally start at the bottom of the construction process, the ground clearance and foundations and work up through the building sequence to the final stages such as painting and decorating.

Estimating the cost of a project requires a structured approach, but whatever method is used, the first thing is to decide the level of accuracy required. This depends on the status of the project and the information available. There are four main estimating methods in use, varying from the very approximate to the very accurate. These are:

3 Comparative (degree of accuracy +/- 10%)

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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