Uses Expert Judgment And Historical Information

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Once a detailed WBS is established, and all of the work packages for each deliverable are identified resources such as: work hours, materials, Equipment hire, software, training can be added. Using software to create a WBS is recommended. There are various methods for estimating costs which include •One-point estimates – uses expert judgment or historical information to develop on estimate per activity and is simple and fast but can encourage padding, be inaccurate, and fail to gain by-in from team members •Three-point estimating – much like for time management the approach uses pessimistic, most likely and optimistic costs to develop the estimate. This method’s accuracy is dependent on known costs, expert judgment, and historical…show more content…
You can do this by organising quote’s i.e. from the resources performing the task, internal workers or contractors, or by reviewing past projects with similar work packages or buy interviews with stakeholder that are involved with the task. One way to estimate cost is to break the resource down into worker hours and multiply it by the rate of resource cost per hour, and then add any overheads like cost per use and any material costs, tool machinery or fees and licenses. Once costs are added to the WBS you will then have a building block to create a time phased budget, a time phased budget is used to track spending, it determines when and where each dollar is needed. It will give the project accounting team a schedule and time to organise payments. Most companies will have a rigid purchasing policy that must followed during the lifecycle of a project. For example, the amount of written quotes need for each dollar amount spent on a task. And payment methods used for the amounts. And what amounts needed to be signed of and approved before they can be spent. During the lifecycle of the project it is important to update the budget with actual figure to track the health of the projects budget. Example of a cost estimate using the WBS from Microsoft project. (ACME move Case study) Task NameDurationStartFinishPredecessorsResource NamesCost Acme relocation project122 daysSat 7/30/16Mon 1/16/17$205,913.00 project initiation stageMon
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