Cost Estimation

Cost estimating is the practice of forecasting the cost of completing a project with a defined scope. A cost estimate is a summation of all the costs involved in successfully finishing a project, from inception to completion (project duration). It is an ongoing process, therefore, estimate revisions are a norm in order to ensure accuracy throughout project life cycle. The classification of cost can be divided into two main categories.

Direct Cost: The cost directly impacts the project has considered as direct cost, it includes project team wages, costs of resources to produce physical products, fuel for equipment, and money spent to address any project-specific risks.

Indirect Cost: The cost not directly associated with a specific cost center and simultaneously contributed among the other projects is considered as indirect cot. It includes wages of support staff, utilities, security services etc.