What are the effective project cost estimation techniques?

Cost estimation is an essential procedure in project management since it is considered the foundation for establishing and managing the project budget. Project managers use cost estimates to calculate the overall sum of funds needed to complete a project on time and within budget. For project management to be successful, accurate cost estimation is crucial. Because a cost estimate’s accuracy determines how well planning and decision-making are done in predicting and adjusting for future change (Fraser Sherman, 2019).

Cost estimation is the process that determines a budget that meets the financial commitment required for a project to be effective by taking into consideration direct costs, indirect costs, and other factors (Jason Westland, 2022). In order to execute a project within scope and on schedule, it is necessary to estimate all of the costs involved. The first step in each project’s planning no matter the size or field is to create a cost. Cost estimation can assist project managers to maintain the budget by understanding how much money can be afforded, predicting the funds required, and comparing the estimation to the budget. It can also halt overspending as before starting a project all costs are estimated (Dave Lee, 2021).

One of the main tasks in project management for project managers is cost estimation. It is clear that any project is constrained by three principal factors which are scope, budget, and time, and since cost estimates directly address the budget constraint, it is very important to project management. There are different types of estimating costs and the most important ones are Historical Estimating, Parametric Estimating, and Bottom-Up Estimating. (Sinha., S. & Vaidya., D., 2022). To complete a cost estimation the tasks can be made more achievable by breaking it down into more manageable milestones (Indeed Editorial Team, 2022).

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