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This is the second process of the cost management knowledge area. The process of developing an approximation of the monetary resources needed to complete the project activities. Following activities should be done as a part of this process.
- Cost of every activity is estimated by adding the cost of all the resources of an activity.
- Based on the organization policy calculate the cost of overhead, indirect cost, labor cost, material cost, services cost etc.
- Document the assumptions, which are basis of the estimation.
- Estimate the contingency reserve for the project, each milestone, phase.
We know from our experience that the money which we pay for using resources on our project are paid at different time sometimes in advance of using resources, other times after using resources and other times it may be prorate basis. This is another important think we should keep in mind when we are estimating the resources cost. Although this is part of next process, Determine Budget, but until we put the resource cost at right place on the project timeline it will be wrong approximation when we sum-up the cost for budgeting purpose.