01/24/2022
๐ช๐ต๐ฎ๐ ๐๐ฟ๐ฒ ๐๐ต๐ฒ ๐ง๐๐ฝ๐ฒ๐ ๐ผ๐ณ ๐๐ผ๐๐ ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ๐ ๐ถ๐ป ๐ฃ๐ฟ๐ผ๐ท๐ฒ๐ฐ๐ ๐ ๐ฎ๐ป๐ฎ๐ด๐ฒ๐บ๐ฒ๐ป๐?
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There are three main types of cost estimates in project management, ๐๐ถ๐๐๐ผ๐ฟ๐ถ๐ฐ๐ฎ๐น ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ, ๐ฃ๐ฎ๐ฟ๐ฎ๐บ๐ฒ๐๐ฟ๐ถ๐ฐ ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ and ๐๐ผ๐๐๐ผ๐บ-๐จ๐ฝ ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ according to Learning FM. Use the estimate type that gives you the most accurate cost estimate based on the information you have on hand.
1. ๐๐ถ๐๐๐ผ๐ฟ๐ถ๐ฐ๐ฎ๐น ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ
This type of estimate uses costs taken from a similar project done in the past. A tradesperson can then adjust these costs for inflation or any different parameters attached to this particular project.
A historical estimate can be quick to make and doesnโt require a lot of resources from a company as one person can draw it up.
Itโs also useful for residential projects.
For example, a contractor might need to make an estimate for a bathroom remodel thatโs very similar to a project she did a month ago. This helps her draw up a project budget. Once the contractor receives final plans for the bathroom, she can get bids from subcontractors, should she need them.
The flip side is that a historical estimate is the least accurate type of cost estimate. This method should only be used when drawing up a preliminary estimate when there isnโt a lot of information available about a project.
2. ๐ฃ๐ฎ๐ฟ๐ฎ๐บ๐ฒ๐๐ฟ๐ถ๐ฐ ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ
Parametric estimates use simple calculations to estimate costs. It often takes standard rates and multiples them by the dimensions of the space being worked on.
For example, a contractor is building a shed in a homeownerโs backyard. She knows that this type of space costs about $100 per square foot to build. The shed is 100 square feet. She multiplies $100 by 100 square feet to get a $10,000 estimated total cost.
You can either estimate the entire project cost or parts of a project using this method. Parametric estimates are more accurate than historical estimates.
3. ๐๐ผ๐๐๐ผ๐บ-๐จ๐ฝ ๐๐๐๐ถ๐บ๐ฎ๐๐ฒ
This type of estimate prices each type of work involved in a project separately. Itโs called bottom-up estimating because a contractor estimates the more basic type of work first and then costs progressively more complex types of work. Each activity is priced individually, so you can get a very accurate cost estimate.
In fact, bottom-up estimates are the most accurate type of cost estimate. This method also takes lots of time to prepare and should only be used if thereโs sufficient information and time to do so.
For example, LinkedIn looks at doing a bottom-up estimate for a web design project. There are three parts of the project: design the website, make content for the website and develop the website. Each part is estimated:
$40 per hour and 20 hours for the graphic designer (total: $800)
$20 per hour and 15 hours for the copywriter (total: $300)
$30 per hour and 50 hours for the developer (total: $1500)
These three totals make a grand total of $2600.
SOURCE LINK: https://www.freshbooks.com/hub/estimates/different-types-of-estimates
