The document explains the four common types of cost estimation in project management, including approximate estimation and detailed project cost plans tailored to client needs. It highlights the importance of various techniques while factoring in unforeseen elements like market fluctuations and natural disasters that can impact project costs. The consultancy, Nedeserv, specializes in providing detailed construction cost estimates across the United States for both public and private sector clients.

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WHAT IS COST ESTIMATION IN
PROJECT MANAGEMENT AND
THEIR TYPES?
There are different types of Cost
estimation in project management.
But, Here we have mentioned 4 types
of cost estimation in project
management that are most commonly
used by cost estimators for
construction.
Types Of Cost Estimates In
Project Management
Approximate estimation
Overall gross cost estimation in project management, roughly designed to
give an idea to the client to determine whether he carries funds to initiate a
project or not.
It helps to determine if a project is remotely feasible for the client and is
done in the initial stages.
For example; if you think a cost estimation in project management could
cost $ 100k, you would give it a range (-25% to + 50% variance) of $ 75k –
$ 150k, to see the budget of the customer.
Cost Estimation Techniques:
Once a client is satisfied with the gross ballpark cost estimate, the estimator
has to prepare a detailed project cost plan.
Schedule that is customized according to the client’s needs. This type of cost
estimate technique is more detailed and tailored as per the client’s funds.
For example; your initial estimate of 100k proves to be correct, you can now
give a (-10% to + 20% variance) $ 90k – $ 120k range.
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Final Estimate of the Project Scope Statement
This one is prepared after diligently working out all the types of cost
estimation techniques affecting factors and contingencies.
It is the final type of cost estimation in the project scope statement and is
refined for project budget approval, hence, covers all major and subsidiary
details of the total project budget.
For example, after assembling a complete statement, the $ 100k budget is
still in place, this type cost estimation would now consider (0% to + 15%
variance) i.e. $ 100k + $ 15k contingency.
Keeping the requirement of estimate in mind, an estimator can use various
techniques and approaches to ensure a comprehensive and precise cost
estimate.
Estimation assistance
Some factors hold a sound impact on a project’s cost estimation in project
management and budgeting. E.g.
Client’s insight to determine the feasibility of the project.
Contractor’s ability to decide the profit potential of a project.
Contracting team’s working on financing the project.
Project team’s ability to make decisions about design and materials
procurement.
Cost estimator’s ability to predict and take into account beforehand all the
positive and negative factors that could affect the total cost of the project.
Apart from these, there are some inevitable and unforeseen factors that can
massively affect a project’s cost, provided they are neglected. These include
possible market fluctuations, natural disasters, and other contingencies. A
good estimator always takes these factors in mind while creating an estimate.
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National Estimating, Drafting and Engineering Services ®, is a professional cost estimation consultancy specializing in providing detailed construction cost estimates. Our cost consultants provide our clients, both
public and private institutions with different office locations throughout the United States with expert, data-driven guidance on their construction projects. National Estimating, Drafting and Engineering Services
®, is a professional cost estimation consultancy specializing in providing detailed construction cost estimates. Our cost consultants provide our clients, both public and private institutions with different office
locations throughout the United States with expert, data-driven guidance on their construction projects.