Cost Management

Business

Quiz 8 :
Cost Estimation

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Quiz 8 :
Cost Estimation

Cost Estimation Cost Estimation is a tool that helps the management in making strategic decisions. Cost estimation help in predicting the future cost for any project in consideration. Cost estimation is a key driver as it estimates based on the past trends cost. Cost estimation helps in creating value chain, target costing pricing. Discussion and analysis: Cost estimation is a method of estimating the cost that will be incurred in future taking past trends, costs analysis. Cost estimation is a key driver as it estimates based on the past trends cost. Cost estimation helps in creating value chain, target costing pricing. Cost estimations helps in estimating the cost of a project, operation or program, through cost estimation process. It is used in estimating resources that will be required to execute a project which involves man, machine, money, material and many such.

Cost Estimation Cost Estimation is a tool that helps the management in making strategic decisions. Cost estimation help in predicting the future cost for any project in consideration. Cost estimation is a key driver as it estimates based on the past trends cost. Cost estimation helps in creating value chain, target costing pricing. Discussion and analysis: Cost estimation is used in predicting the future cost that a company might have to incur for a project. Cost estimation help in two ways in a strategic decision. First by estimating the cost for a future project i.e. predicting the future cost. Secondly, it helps to know what resources will be used i.e. key factors or drivers for the project can also be estimated with this. This helps the management in taking a note of a project and available resources and identify the cost resource suitable project for them.

Cost Estimation Cost Estimation is a tool that helps the management in making strategic decisions. Cost estimation help in predicting the future cost for any project in consideration. Cost estimation is a key driver as it estimates based on the past trends cost. Cost estimation helps in creating value chain, target costing pricing. Discussion and analysis: Cost estimation can be done from various method. Following are the two methods: a) High-Low: This method averages out the highest cost incurred and lowest occurred. This gives a range of the cost that may be required for the project. Disadvantage is that its uses only two or selected point for estimating. b) Regression: Advantage of this method is that it uses quantitative data for more precise estimation and is more reliable. Disadvantage is , as it involves statistical method it is more complex and incur high cost in estimating as requires technical skill for its operation.

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