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Project Cost Estimation

Project Cost Estimation - Top 10 Checklist Cont

7. Key things to check and not overlook in project cost estimation are setting up environments, deploying software, buying software, servers and connectivity, configuration management, Database Administrators, Business Systems which all need to be checked and accounted for in your budget. Also remember that if you are buying software then you will need a resource to actually install it. Similarly any server's bought will need networking resource to set up IP Addresses, routing etc etc. Often these are all too easily forgotten.

8. Work out your contingency approach to your budget and make sure you implement it within your budget. I have seen too many projects where the Project Manager forgot to build contingency into the budget which leads to huge problems later on.

9. Be extremely careful to be clear exactly what is included in the project cost estimation, what isn't and what assumptions you have made. If you have based any of this on the verbal assurances of others, for example that only cheaper permanent resources will be used on your project, ensure you get this in writing by email in case of problems later on. This also includes project tolerances which I always strive to be at least 10%, but which most Organisation unsurprisingly prefer to be around the 5% mark!

10. Lastly always ascertain what the culture of the Organisation you're working at is. I have consulted at Organisations where all the workstreams were insanely optimistic about the resources which would be used as well as the timeframes. On the flip side, at other Organisations estimates have been very much in the doom and gloom category. So gauge the culture carefully, as it can mean a big difference to your project costs.

Back to Points 1-6 of the Project Cost Estimation Checklist.

Project Cost Estimation - Top 5 Mistakes

  1. Not properly understanding the scope of the project and then articulating the wrong scope to workstreams.
  2. Trying to provide detailed estimates before project management requirements, specifically the Business Requirement Specification (BRS) is completed and approved
  3. Being pressurised into providing "off the cuff" estimates in meetings. A definite "no no" unless you are a highly experience project manager.
  4. Not including any contingency into the budget or worse still including it but then telling everyone about it. Soon you'll find there is no contingency. Always keep this quiet.
  5. Not getting effort and time estimates from workstreams by email and instead relying on verbal utterances. It's amazing how quickly people forget what they said. With email it's hard for them to dispute what they agreed to!

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