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Management Fix
By definition, the project cost is the total funds needed to complete the project. It is defined by the expenditures or monetary obligations made or estimated to be made, recorded in a project baseline. (1)
Project Cost is always considered as one of the key components of project management. No project starts without a budget. Project success is decided by how well the project cost has been handled in the project. It’s crucial to come up with the correct cost estimation needed for the project. (2)
There are many techniques available to be used:
- Expert judgment,
- Analogous estimating,
- Parametric estimating,
- Bottom-up estimating,
- Three-point estimating, and
- Cost of quality.
Cost estimates are the basis for allocating budget to work packages and deliverables, which can be politically sensitive within a project and its stakeholders. Therefore, budget determination and assignment require some stakeholder involvement, communication, and, in most cases, their approval. (5)
Project managers should use effective cost project estimation to achieve some benefits:
- Prevent overruns: By allotting costs in the early planning stages, project managers ensure they don’t overspend on specific…
