Week 1
Hello everyone,
The topic that I decided to research is Estimating Costs.
Cost estimation is an essential procedure in project management since it is considered the foundation for establishing and managing the project budget. Project managers use cost estimates to calculate the overall sum of funds needed to complete a project on time and within budget. For project management to be successful, accurate cost estimation is crucial. Because a cost estimate’s accuracy determines how well planning and decision-making are done in predicting and adjusting for future change (Fraser Sherman, 2019).
· Jason Westland (2022, February Feb 09). Cost Estimation In Project Management: How to Estimate Project Costs.
· Dave Lee, (2021, May 03). 11 Cost Estimating Methods (With Formulas and Examples).
· Sinha., S. & Vaidya., D. (2022). Cost Estimate.
· Indeed Editorial Team (2022, June 18). Cost Estimating in Project Management (Steps and Techniques).
Week 2
Hi Everyone,
Project managers use cost estimation to determine how much money will be required to fund their initiatives. Direct costs, indirect costs, and profit margins are involved in the process as the three main parts of the cost estimations (Singla & Sridharan, 2021). Direct costs are directly related to the creation or delivery of a good or service. Examples of direct expenses include the cost of the raw materials used to make a product and the wages of employees who work directly on it. Costs that are not directly related to the creation or delivery of a good or service is known as indirect cost such as costs of office materials. Making an estimate that accurately reflects reality is a challenge for the estimator. Project managers find it challenging to comprehend the elements that need to be taken into account to generate a precise and reasonable cost estimate for the project (Carr, 1989).
Cost estimating is the procedure of gathering and predicting a project’s costs throughout its life cycle. It incorporates the steps from the original function chart: project investment cost, cost prediction, and economic evaluation (Georgas & Vallance, 1987). Project managers may take into account additional project components as they estimate costs, such as size, scope, duration, and complexity. When estimating costs, one should consider the availability of resources and make decisions based on the facts at hand regarding the project’s tasks, cost planning, and resource management (Doloi, 2011).
Each project proposal should include accurate cost estimates and every project manager needs accurate cost estimates to enable effective cost control. Budgeting and cost control are extremely important but difficult in an uncertain world. Because we don’t know everything about the future, we cannot create assumptions that will hold true as the project moves forward. The uncertainty it introduces in decision-making is a significant obstacle (Torp, O. & Klakegg, O. J., 2016).
References:
• Singla, H. K. & Sridharan. S. (2021, September 03). Factors influencing the level of accuracy and compromise in overhead estimation for construction projects in India: an exploratory investigation.
• Carr, R. I. (1989). Cost-Estimating Principles. Journal of Construction Engineering and Management.
• Georgas, P. C. & Vallance, G. V. (1987). Cost Management. PM Network.
• Doloi. (2011). Understanding stakeholders’ perspective of cost estimation in project management. International Journal of Project Management.
• Torp, O. & Klakegg, O. J. (2016, October 20). Challenges in Cost Estimation under Uncertainty—A Case Study of the Decommissioning of Barsebäck Nuclear Power Plant.

Week 3
Hi Everyone,
This week I reviewed five papers for my research questions. The findings helped me to understand the challenging factors in cost estimation more deeply.
One of the key elements in determining a project’s success is cost estimation, which has a big impact on various project stages like budgeting, planning, engineering design, financial management, construction management, and the strategy for entering tenders (Babaei et al, 2022). Since cost prediction forms the basis for making crucial decisions regarding financial investments and borrowings, its accuracy is crucial to the project’s success (Yang, 2005).
One of the most important issues in cost estimation is accuracy. Creating accurate estimations is a difficult task. Cost analysts and estimators face numerous obstacles that impair the precision and quality of estimates. The success of a project depends on project managers being able to estimate project costs accurately, which is one of the trickiest aspects of project management. The accurate estimation will help managers choose appropriate alternatives and prevent them from judging technical and financial solutions incorrectly (Barbu & Sandhu, 2020).
Projects may face overestimation or underestimation. Understanding the goals, needs, constraints, and underlying assumptions is essential before beginning any costing exercise. Cost overruns may be a recurring result of professionals underestimating initial costs (Sloan et al, 2014). It is difficult to accurately estimate project budgets before execution due to a lack of information and risks. A project management plan with cost estimation is created before projects are built. Delivering the project with the most accurate cost estimation at the highest quality is one of the main goals of a project manager.
Numerous factors might cause an overestimate or underestimate of the cost, which are all factors that affect cost estimates. The goal of one of the research papers that I researched this week was to identify the variables that affect the Jose Alvalade Stadium building project’s cost performance. According to the findings of the study, the project’s success was largely attributable to the project manager’s optimistic attitude, excellent monitoring, coordination abilities, and open communication with the rest of the project team (O’Callaghan, 2007).
References:
Babaei, M., Rashidi-baqhi, A., & Rashidi, M. (2022, February 02). Estimating Project Cost under Uncertainty Using Universal Generating Function Method. ournal of Construction Engineering and Management.
Yang, I. T. (2005, May 04). Simulation-based estimation for correlated cost elements. International Journal of Project Management.
Barbu, A. O. & Sandu, M. (2020). THE IMPORTANCE AND NECESSITY OF COST MANAGEMENT OF CONSTRUCTION PROJECTS. Urbanism. Arhitectura. Constructii.
Sloan, B., Tokede, O., Wamuziri, S., & Brown, A. (2014). Cost analysis error? Exploring issues relating to whole-life cost estimation in sustainable housing. Journal of Financial Management of Property and Construction.
O’Callaghan, Ramon. (2007, December 1). Fixing the Payment System at Alvalade XXI: A Case on IT project Risk Management. Journal Of Information Technology.
Week 4
Hi Everyone,
This week I reviewed five more research papers for my questions and would like to share my thoughts with you.
The goal of the cost estimation function is to show whether the specified budget has been exceeded. It also serves to inform the client of how decisions may affect project costs (Kanoglu, 2003). Cost estimation is crucial for completing a comprehensive and reliable project plan as it increases the likelihood that it will be completed on schedule and within budget. Also, by streamlining alignments and minimizing the need for negotiations, it will help in saving time and effort in other areas of project management, such as communication and time management. The consolidated costs are estimated by taking into account the amount, quality, cost, and performance of the resources required for the work, and the additional factors such as the project environment and the scope of knowledge needs which could have an impact on how well those resources perform (Akintoye, 2000).
Accuracy can be considered the main key influencing factor in cost estimation since it is the most difficult phase of project cost management. Cost estimating has been a focus point for design and operational strategies as well as a significant agenda item for management policies and corporate decisions because of this delicate and important position in projects (Niazi et al., 2006). In addition to the standard components for cost calculation, such as the necessary resources, prices and durations, necessary assumptions, potential risks, previous project costs, and industry benchmarks, project managers also need to consider macro factors like inflation, the company’s financial health and the time value of money. Large-scale projects can experience more difficult performance problems because of their considerable investment and complexity (Hwang et al., 2018).
The process of cost estimating involves gathering and evaluating past data, as well as using quantitative models, techniques, tools, and databases to project an estimate for future costs (Nussbaum, D. & Mislick, G. (2015). A cost manager can calculate the costs using one or more of these techniques. The four main analytical techniques are Analogy, Parametric, Bottoms Up, and Actual Costs. Which method a project manager chooses will depend on the amount of schedule, scope, and resource information available.
References:
Alaattin Kanoglu (2003). An Integrated System for Design/Build Firms to Solve Cost Estimation Problems in the Design Phase. Architectural Science Review.
Akintoye, Akintola (2000). Analysis of factors influencing project cost estimating practice. Construction Management and Economics.
Hwang, B., Ming, Sh., Zhu, L., & Lim, W.C. (2018, October 01). Cost control in megaprojects: efficacy, tools and techniques, key knowledge areas and project comparisons. International Journal of Construction Management.
Nussbaum, D. & Mislick, G. (2015). Cost Estimation: Methods and Tools.
Week 5
Hi Everyone,
The topic that I have chosen is estimating costs.
A project’s cost estimation is a forecast of the cost of the materials needed to complete the project. It is very difficult to guarantee that a project stays on schedule and within budget without accurate estimates. Hence, it’s crucial to have a precise cost estimate in order to succeed in project completion on time and within budget. It also helps with decision-making, in terms of setting priorities for activities or changing the project’s scope to stay on schedule. The success of the project depends heavily on the project manager’s capacity to anticipate costs within the allotted budget. I believe accurate cost estimates are essential to the success of any project no matter the field and scope.
Though I understood the importance of cost estimation in project management, I did not have much information about the essence of accuracy and how it may affect the overall project. Also, while doing my research I found useful techniques that can increase the accuracy of cost estimating which I was not aware of. Among the variety of numerous methods, analogy, parametric, bottoms-up, and actual costs can be considered the four primary ones. Depending on the quantity of schedule, scope, and resource information available, a project manager may select one method over another.
What has not been explored or underexplored in the related research literature about your chosen topic?
Throughout the project, I made an effort to find as many research articles as I can to answer my questions and gain more knowledge in cost estimation. While analyzing the project’s success factors in avoiding overestimation and underestimation, the factors influencing the Jose Alvalade Stadium construction project’s cost performance were the project manager’s positive outlook, outstanding monitoring, coordination skills, and open communication with the rest of the project team. Since I believe it takes a lot of time and that time can be one of the constraints on precisely estimating costs, I was aiming to learn more about cost estimation in the literature review on time management and preventing time loss.
Cost estimation is the process of determining how much money and other resources will be needed to complete a project within a set time frame. During my research on the chosen area, I was able to find many answers to my questions. Cost estimates are occasionally utilized as a strict constraint on the project’s scope due to the significant costs associated with completing a project, which means if the initial cost estimate is too high, this can lead to scaling it back or even canceling the project. Once the project is underway, all associated costs are managed using the cost estimate to keep it within budget. There is more to study and research on this topic since it is one of the core aspects of achieving success for project managers.

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