PMP Exam Cram™ 2

Key Cost Estimating Factors

A great deal of overlap exists between the “time” estimating topics covered earlier in this chapter (and in the PMBOK) and the “cost” estimating and budgeting topics you need to know for the exam. The key difference is that cost estimating is focused on the cost of the resources needed by the project, whereas activity duration estimating is focused on the time duration of the project's work activities.

Another key point to remember is that you need to have the activity duration estimates to do cost estimating. In total, three main factors affect project cost estimating:

• Activity duration

• Resource rates

• Risk

With a cost estimate for each work activity, a time-phased budget or cost baseline can be developed to measure ...