Blog Assignment: Estimating Costs and Allocating Resources
In the article Project Management Cost Estimating Techniques, it discusses resource costing, unit costs, empirical methods, and historical costing. Resource costing is estimating the cost based on the resources needed to complete the project. Such resources could be the equipment, materials, services, and labor (Markgarf, n.d.). For my project, I can use this technique to solicit the most cost-efficient and budget friendly prices for the needed resources. Unit costs evaluate “using a cost-per-unit” for the project which can be received from the project suppliers (Markgarf, n.d.). I can use this within my project to have my supplier provide me with the lowest cost available per unit. According to Markgarf (n.d.) explained empirical methods by saying:
If your project is typical of your industry and businesses have completed similar projects over the past few years, an empirical approach can be highly accurate and take the least time. To use this approach, you usually have to buy software or a paper-based system that contains statistical information about the other, completed projects. You choose the characteristics that apply to your project from a list, fill in the overall parameters such as size and location, and ask for the cost breakdown. The system will provide typical costs for that kind of project. Consultants active in your industry will have information on empirical systems and might be able to supply them. (para. 3)
Historical cost is estimating the cost of the project by utilizing recent similar project cost. I can use this approach by reviewing similar projects completed by various IDs to see what costs I should include or not include in my project.
In the article 4 Tools to Estimate Costs in the Project Management, it discusses four tools to estimate costs for any project. It lists analogous estimating, parametric estimating, bottom up estimating, and three point estimating. Analogous estimating based on similar project previously completed. Parametric estimation technique uses historical information along with statistical data from similar projects to estimate the cost of current projects. The Bottom-Up Estimating technique is also known as the “definitive technique” (Usmani, n.d.). In this technique, the cost of each single activity is determined with the greatest level of detail at the bottom level and then rolls up to calculate the total project cost (Usmani, n.d.). Three-Point estimating takes three estimates and then their average to determine how to reduce unforeseen costs or risks. All of these techniques I could use to select the most affordable resources needed to complete the project.
Markgraf, B. (n.d.). Project Management Cost Estimating Techniques. Retrieved from http://smallbusiness.chron.com/project-management-cost-estimating-techniques-40508.html
Usmani, F. (n.d.). 4 Tools to Estimate Costs in the Project Management. Retrieved from http://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/