Estimating the scope of the project is often a time-consuming and complex activity, but it forms the basis of your project schedule and budget.
- Provide reliable and accurate cost and time estimates for projects.
- Provide an estimating process for estimating costs and time.
Important tasks and actions:
All projects (except Scrum projects) should have a scope definition document to be estimated as good as possible at each M (or whenever feasible). You should have control of your scope at any time, so you know when you are using the planned contingency.
Add contingency according to the following guideline:
|M||Phase||Cost estimate accuracy|
at 80% confidence interval1
|M0||Business planning||N/A||Not given|
1 The confidence interval is an expression for the accuracy of the estimate.
2 More contingency may be acceptable for high risk projects – based on cost risk analysis.
Use peer review for quality assurance of the project estimate. Peer review is best done by a project manager who has experience from similar projects. (Peer review is a generic term that is used to describe a process of self-regulation. The purpose of a peer review is to maintain standards, improve performance, and provide credibility.)
Estimating operational costs is equally important as to estimate project costs. This forms an important basis for estimating Total cost of Ownership (TCO) for projects.
The method “Successive Calculation” or the “Lichtenberg method” could be used for cost estimates. Use the project cost or operational cost worksheets in the Excel spreadsheet “Cost and benefit template” for estimating costs and time.