Costs such as salaries and equipment rental are a more cut and dry expenses to estimate than the cost of effort. Describe how to estimate effort. Discuss why it is so important to estimate projects correctly, and why overestimating projects can be just as detrimental as underestimating them.
Accurately estimating the cost of a project is the ultimate planning foundation for any project. If estimates are as close to the real cost of the project as possible then the work can be conducted and coordinated efficiently. Since perfectly accurate estimates are rare it becomes even more important to be as accurate as possible. We know there are three early estimates that one needs for any project and those are effort, duration and cost. Effort must be estimated first because when you understand the actual effort that will be required then you can dole out the resources to determine the duration of the project and ultimately be able to give a more accurate estimate of the costs including labor and non-labor.
When estimating effort you could use the following steps:
1. Determine how accurate your estimate needs to be.
2. Create an initial estimate of how many effort hours will be needed for each portion of the project and then the project as a whole.
3. Next include any specialist resources hours i.e. Training, legal, administrative, etc.
4. Do not forget to add in ...
This solution explores the cost of effort and the importance of estimating it in your overall project estimates. Also explored are how detrimental overestimating projects can be.