A preliminary cost estimate can be started after an initial Work Breakdown Structure is developed. Cost estimate integration with the WBS occurs at the lowest level WBS element, the activity. Each activity will have cost/resource estimate associated with it.
Cost Estimate Development Process
- Define Project ScopeBased on the client’s RFP, it is important that the project team fully understands the project scope.
- What is the end product?
- What are the acceptance criteria?
- What deliverables are required to define the end product?
- Are there project phases required?
- What CWPs are required to accommodate the clients contracting strategy?
- Are there any mandated constraints?
- Are there any assumptions the project team is making?
- Is it green field or brown field work?
- How do you define when the project is complete?
- How do we measure project success?
WBS / Deliverable EstimateOnce a thorough understanding of the scope is understood. The WBS can be finalized. The Estimate should be based on the activities required to fulfill the scope, the resources required to complete each activity (material, equipment, labour), and the quantity required of each resource (hrs, qty). As well, an estimated duration or amount of work days to complete said activity is required (Crew 5 men for 8 days = 40hrs). Each item should be coded to the full WBS.