To estimate the cost of project is just like to estimate the cost of any product. But it is not so easy because a big project like construction of building may be divided in sub-projects. So, it is duty of project manager to find the cost of all sub-projects for estimating the cost of that big project. If you estimate the cost of a project before starting any project, it will reduce your project cost and you can show estimated price of project. These days, project manager uses MS Project for estimating project cost.
1st Step : To Determine the WBS
WBS structure shows the scope of project in a simple graph and we can know all sub- projects whose cost, we have to estimate.
2st Step: To Determine the requirement of Raw material
For completing every type of project, we need raw material. What quantity will require for completing the project. To determine it will be the first step to estimate the cost of project.
3nd Step : To Determine the Market Rates of Raw Material
Go to market and check the market rates of Raw material. Suppose, if you want to make rice product and 1121 Banspati Rice’s today price is Rs. 2500 per quantal. So, before choosing best price, you must see quality and other competitor’s price.
4rd Step : To Determine the Estimated Cost of Raw Material
Just multiply estimated price of raw material with total quantity of raw material requirement.
5th Step : To Determine the Labor Cost of Project
Go to market and check the labor hour rate and also analyze the total requirement of laborers for completing the project. Calculate labor cost with following formula
= No. of laborers X Total working hours X Labor hour rate
6th Step : To Determine other Overheads
For estimating project cost, we should also determine other overheads and then add it to the estimated prime cost of project. Only after this, we can estimate the project cost.
1st Step : To Determine the WBS
WBS structure shows the scope of project in a simple graph and we can know all sub- projects whose cost, we have to estimate.
2st Step: To Determine the requirement of Raw material
For completing every type of project, we need raw material. What quantity will require for completing the project. To determine it will be the first step to estimate the cost of project.
3nd Step : To Determine the Market Rates of Raw Material
Go to market and check the market rates of Raw material. Suppose, if you want to make rice product and 1121 Banspati Rice’s today price is Rs. 2500 per quantal. So, before choosing best price, you must see quality and other competitor’s price.
4rd Step : To Determine the Estimated Cost of Raw Material
Just multiply estimated price of raw material with total quantity of raw material requirement.
5th Step : To Determine the Labor Cost of Project
Go to market and check the labor hour rate and also analyze the total requirement of laborers for completing the project. Calculate labor cost with following formula
= No. of laborers X Total working hours X Labor hour rate
6th Step : To Determine other Overheads
For estimating project cost, we should also determine other overheads and then add it to the estimated prime cost of project. Only after this, we can estimate the project cost.
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