Project Cost Estimation

Duration: 3 Days

Overview

Outline

Estimating project costs is essential from many perspectives, not least:

  • Developing the project budgets

  • Determining funding requirements

  • Ensuring costs are within acceptable parameters

  • Managing stakeholder expectations

  • Establishing the key performance metrics to measure financial efficiency

 

Of equal importance is the need to capture the lessons learnt, after each mission is completed, and create a feedback loop into the cost estimating process to revise and refine the technique.

This course will be an interactive learning experience using group work, practical exercises and discussions to cover each of the key areas listed below. The content will be customised to reflect the use of these techniques within your organisation. It will also utilise industry best practices and approaches.

Role of Costing in Projects

  • Costing principles and concepts

  • Benefits and uses of costing

  • Cost capture environment

  • Difference between BAU and Projects

  • Overview of industry best practices and approaches

  • Cost-benefit concept

Cost Categories & Types: Definitions and Principles

  • Capital costs

  • Operating costs

  • Fixed and variable costs

  • Direct & Indirect costs

  • Recharged costs

  • Cost elements: Materials, Labour, Overheads etc.

  • Asset Lifecycle costs

  • Mapping costs to Project phases and WBS

Estimation, Concepts, Techniques & Approaches

  • Analogous Estimating

  • Parametric approach

  • Expert Judgement

  • Bottom-up Estimating

  • Activity Based Costing

  • Three-point Estimates

  • Reserve Analysis

  • Vender Bid Approach

  • Margins of Tolerance

  • Use of probabilities and trends

Cost Risk Management

  • Understanding risk and its relevance to cost estimation

  • Identifying types of cost risks and uncertainties

  • Managing and mitigating cost risks

Sourcing Costs Internally

  • Using data from the finance systems

  • Developing data capture points

  • Harvesting data from past projects

Sourcing Costs Externally

  • Industry benchmark data

  • Obtaining supplier feedback through tenders and RFPs

  • Evaluating supplier responses

Standard Costing

  • Standard costing principles and concepts

  • Data requirements and capture

  • Devising the standards

  • Applying the standards

  • Revising the standards