#PM Cost Management—A Closer Look at the Inputs to the Estimate Costs Process

This post is a closer look at the Inputs to the Estimate Costs Process, and categorizes them according to the particular estimating tools & techniques they will be used for in the process.

1. Introduction

There are six inputs to the Cost Management Process 7.1: Estimate Costs. They come from the Scope Knowledge Area (Scope Baseline), the Time Knowledge Area (Schedule), Human Resources Area (HR Plan), and the Risk Knowledge Area (Risk Register), as well as the all-purpose inputs from Enterprise Environmental Factors (EEF) and Organizational Process Assets (OPA).

Here’s a description of the Inputs to the Estimate Costs.

Inputs How used in Estimate Costs Process
1. Scope baseline (= Scope Statement, WBS, WBS dictionary)
  • Scope Statement contains assumptions on whether estimates include direct project costs only or indirect project costs as well.
  • Scope Statement contains list of constraints, including budget constraints.
  • WBS dictionary contains detailed description of work used to produce deliverables, which is helpful in bottom-up estimates.
2. Project Schedule Activity duration estimates and activity resources estimates are crucial for bottom-up cost estimates.
3. Human Resources Plan This will give info on manpower resource estimates and will give estimates on costs of reward/recognition programs.
4. Risk Register This will assist in creating three-point estimates and reserve analysis.
5. Enterprise Environmental Factors (EEF) Historical information from the marker and published commercial information will be helpful for parametric estimating and analogous estimating.
6. Organizational Process Assets (OPA) Information from previous projects done by the organization will be helpful for parametric and analogous estimating.

There are three orders of refinement of a cost estimate. A top-down estimate is used for a rough estimate, and then a budget estimate is produced with a bottom-up estimate. The accuracy of this is further refined by 3-Point Estimates into a Definitive Estimate.

Note the different inputs that are generally used for each type of estimate below.

The next post will go through the different tools and techniques of cost estimating to compare and contrast them. They also will show the intersection between the cost management knowledge area and the other knowledge areas of the project management process matrix.

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