Cost estimates

Cost estimates provide information on the cost of resources necessary to complete project work, including labor, equipment, supplies, services, facilities, and material. Estimates can be determined by developing an approximation for each work package using expert judgment or by using a quantitative method such as:

• Parametric estimates
• Analogous estimates
• Three-point estimates

Cost estimates should include at least:

• ID
• Labor costs
• Physical resource costs
• Reserve
• Estimate
• Basis of estimates
• Method
• Assumptions
• Range
• Confidence level

Cost estimates can receive information from:

• Cost management plan
• Scope baseline
• Project schedule
• Quality management plan
• Resource requirements
• Risk register
• Lessons learned register

They provide information to:

• Cost baseline
• Resource requirements
• Risk register

Cost estimates are an output from the process 7.2 Estimate Costs in the PMBOK® Guide – Sixth Edition. Cost estimates are developed and then refined periodically as needed.

Tailoring tips

Consider the following tips to help tailor the cost estimates to meet your needs:

• Cost estimates may include contingency reserve to account for risks related to uncertainty in the Cost estimates or ambiguity in the scope or resource
• If considerations for the cost of quality, cost of financing, or indirect costs were included, add that information to your cost estimate.
• Estimate costs at the level of accuracy and precision that suits your project needs. Rolling wave planning is often used for cost estimating; as more information is known about the scope and resources, cost estimates are refined and updated.
• If using vendors, indicate the estimated cost and indicate the type of contract being used to account for possible fees and awards.

Alignment

The cost estimates should be aligned and consistent with the following documents:

• Assumption log
• Activity attributes
• Project schedule
• Resource requirements
• Project team assignments

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