7.2 Estimate Costs

Work out roughly how much each activity will realistically cost.

Planning / Cost · ← PMBOK reference · See it on the map

Why it matters

An estimate padded too high loses the project to a competitor or a budget cut; one that is too low sets the project up to run out of money before it finishes.

What done looks like

Every activity carries a cost estimate with its basis and assumptions recorded.

First time tip

Estimate a reserve for the risks you already know about, separately from the activity costs themselves. Blending the two hides how much of the number is a guess.

What you need (Inputs)

• Cost Management Plan
• Quality Management Plan
• Scope Baseline
  How Scrum/Kanban projects satisfy this — counted from: committed backlog items and definition-of-done items (models/agile.py) — a committed backlog (status ready/in_progress/done) plus a written definition of done is what an agile team baselines scope against
• Project Schedule
  How Scrum/Kanban projects satisfy this — counted from: releases (driftless/models/agile.py:Release) — a release with a target date is the agile reading of a project schedule when there is no sprint or milestone to read one from
• Resource Requirements
• Risk Register
• Enterprise Environmental Factors
• Organizational Process Assets

How you do it (Tools & Techniques)

• Expert Judgment
• Analogous Estimating
• Parametric Estimating
• Three Point Estimating
• Bottom Up Estimating
• Data Analysis

What you get (Outputs)

• Cost Estimates
• Basis of Estimates

Worked example

Repainting the reading room is estimated at $8,000 from a contractor quote and the shelving at $22,000 from last year's branch project, with $3,000 held separately as reserve against the water damage behind a wall nobody has opened yet.

Common pitfalls

• Taking one quote as the estimate when a second would have shown the range.
• Blending reserve into activity costs, hiding how much of the number is a guess.
• Recording the figure but not its basis, so nobody can re-check it later.

How driftless helps

• Analogous Estimating can be run here.
• Parametric Estimating can be run here.
• Three Point Estimating can be run here.
• Bottom Up Estimating can be run here.
• Basis of Estimates can be created in the wizard.