Sunday 19 December 2021

The difference between project cost estimates and budgets



Everyone knows that cost management of projects is important. cost management is divided into cost estimation and cost budget. but there aren't many students who can tell the difference. the difference between project cost estimate and budget is described below.

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project cost estimation is an important part of project plan to estimate and plan the cost of completing project work. to implement cost control, the cost must be estimated first. the cost estimation process is actually a cost estimate that determines the resources required to complete all the work activities of the project, which is an approximation that can be expressed in monetary units as well as in other units such as hours, people, people, and days. cost estimates for various alternatives are also included in the cost estimates.

project cost budget refers to the process of allocating the results of project cost estimation on each specific activity, with the aim of determining the cost quota of each activity of the project, determining the criteria and rules of use of the project contingency reserve, and providing standards and basis for measuring the actual performance of the project.

the participants have just asked questions

what is the difference between budgeted, planned, and actual costs?

go and ask questions project cost budget is a project management work that formulates project cost control standards, which involves the allocation and budgeting of specific assignments and budgeting, cost quota, and the management of the overall project budget according to the project cost estimate.

cost estimates should be made during the preliminary feasibility analysis phase; the cost budget should be carried out in the detailed feasibility analysis stage. first of all, we have to distinguish between "estimation" and "budget" in the project management knowledge system are two different processes, that is to say, two "actions" do not refer to the concept of "numerical". in fact, the project management estimates and budgets are cross - cutting, not diametrically separate.

the scope of the estimate is generally very different from the actual (-50%-75%). the budget actually refines the estimated activity, in essence, or the summary and decomposition of the estimate, to which the budget is more accurate than the estimated accuracy.

estimates are generally used for project projects, while budgets are used for specific implementing units to control costs, i.e. to establish a budget baseline, so the output of the budget is the budget benchmark.

the difference between project cost estimates and budgets

It project cost estimates for a large it software project, due to the complexity of the project and the uniqueness of the it project, the estimation of development costs is not an easy task, it requires a series of estimation processing, therefore, mainly rely on analysis and analogical reasoning means, the most basic methods of estimation are the following:

1, cost modeling technology

mathematical models are used to predict the cost of a project based on its characteristics. historical cost information (which is related to some software metrics of project cost) is generally used to build an estimation model through which to predict workload and cost.

2, experts determine the technology

Also known as Delphi, one or more domain experts and software development technicians are hired to estimate the project cost separately and finally agree to obtain the final cost.

3, analogy evaluation technology

the actual cost of a previous similar project is used as the basis for the current project's estimate.

4, Parkson's Law

Parkson says work can be reflected by the time it takes. In software cost estimates, this means that costs are determined by available resources rather than by target evaluation. If a piece of software needs to be completed by 5 people within 12 months, the workload is 12 X 5 s 60 people months (PM).

5, top-down estimation method

the cost estimate is mainly based on the work decomposition structure, the function of the product and the sub-functional composition of the function to allocate the cost layer by layer.

6, bottom-up estimation method

the cost of each constituent unit is estimated first, and then the final cost estimate is obtained by adding up according to the work breakdown structure.

7, profit pricing method

the cost of the software is calculated by estimating the user's willingness to invest in the project, and the cost budget depends on the customer's budget rather than the software's functionality.

estimates are generally used for project projects, while budgets are used for specific implementing units to control costs. the difference between project cost estimate and budget is exhausted above. more relevant knowledge, welcome to log in to the accounting school - excellent information.

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