Analogous cost estimating means using the actual cost of
previous or similar projects as the basis for estimating the cost of the
Analogous cost estimating
This is used when there is a limited amount of detailed
information about the project.
It uses expert judgment, is less expensive and is less
accurate but reliable in similar project situations.
Determine Resource Cost Rates
Actual per unit human and material resource rates are
collated or estimated.
Quotes, contracts, commercial database, seller published
price lists are used and appropriate
Escalation rates and inflation are incorporated.
Individual schedule activities are estimated to the smallest
detail. All costs are then aggregated and used for reporting, tracking and
control purposes. Here, the individual activity cost consciousness is of prime
This technique uses historical cost with current project
variables that are determined. This is a highly accurate method as it requires
clarity in current project variables.
Project Management Software
Widely Available cost estimation applications can be used
for faster estimation of alternatives.
Vendor Bid Analysis: Vendor Bid analysis is another
technique to benchmark costs. If a project is won in a competitive bid, more
details may be considered for cost estimation and control purposes.
Reserves or Contingency allowances are used to deal with
uncertainty or “knowns-unknowns” and these are added to the cost estimates,
thus sometimes overstating project costs.
Options vary between grouping similar activities and
assigning a single contingency reserve for that group to a zero duration
activity. This activity may be placed across the network path for that group of
schedule activities. As the schedule progresses, the reserve can be adjusted.
Creating a buffer activity in the critical chain method at
the end of the network path as the schedule progresses, allows the reserve to
Cost of Quality
Cost of quality can also be used to prepare the schedule
activity cost estimate.