Estimating is about calculating how much a project might cost by defining the parameters by acquiring the information from a realistic and credible budget source. In this video, learn why a credible budget is essential for a cost estimate and learn how to identify and recognize what makes a realistic and credible budget.
- Have you ever planned a trip … with your family and friends? … You probably didn't just buy plane tickets … and jet off somewhere unknown. … Like most people, you identified … your travel needs and activities … and then budgeted how much it would cost … to know if you had the money to do it. … Estimating seems like a tedious process, … but it's essential even in our everyday lives. … And while it's tempting to guesstimate costs, … you must respect that every cost estimate is unique … and guessing will only lead to poor results. … Calculating how much a project or a purchase might cost … begins with having a realistic budget. … A budget estimate is an opportunity … to see the effort's viability, … and let stakeholders know how much money … they require to proceed with it. … Just like your family trip, you must estimate every project … to get an idea of the cost … and then to see if you have the money to actually do it. … A budget includes critical information … by breaking down tasks within phases, …
- Describe the limitations in reaching 100 percent accuracy in cost estimates.
- Differentiate between nominal, ratio, and ordinal data.
- Relate the reason for credible cost estimates to a company’s business needs.
- Determine situations in which a business would use the top-down estimating approach.
- Examine the validity of data and data collection given a scenario.
- Explore the differences between cost, value, and performance.