Making Sense of Your Project Cost Estimate

    If your estimate for a project’s capital cost is too high or too low, incomplete or wrong, a poorly developed scope is the mostly likely cause. In almost all cases, project cost estimating is more accurate than the scope used to develop the estimate. (To develop a good project scope, please refer to "Get Your Scope Straight for Project Success," CE, February, pp. 36-38). Yet good scope definition is only part of the answer.   What happens in estimating?   A project estimate is a series of activities building on each other.   Scope development, or defining what will be done, by series of specific engineering documents   Estimating or gathering cost data and applying algorithms to determine costs based on experiential factors   Applying risk-management methods to better define a cost basis for major impact items   Developing a contingency based on the above   Each step depends on the prior steps. In practice, project estimating is more accurate than scope development because if we can think of something, we can usually place an accurate value on it based on experience. Most inaccurate estimates…