Estimating the Cost of Running a Project

Budgeting and Cost Estimation The top-down budgeting approach is the preferable approach. Through the strategy, there are better cost control and management. It employs the experience of top management for better and realistic project approximations. However, various costs accompany such benefits. First, it should be identified that the procedure can cause friction between the top, middle, and lower level managers. The major reason to this is the presence of a zero-sum game where a particular manager acquires what another losses.

However, it is pertinent to identify that there are delays in the return on investment. Additionally, the strategy has a lower impact on the overall organization. In this case, the management has to be patient in order to enjoy the benefits that accompany the approach. The approach involves very high deployment coverage during the early stages. In contrast, the bottom-up budgeting has an advantage of being detailed from the start. In this case, costs can be directly linked both to the individual and to WBS tasks.

However, it is pertinent to identify that the practice is time consuming and control is highly shifted from the top-rank management. The top own approach employs the tactical and limited coverage during cost estimation. Unlike the top-down approach, this strategy involves an earlier return on investment. The management can also identify the organizational changes within a shorter period. However, it should be identified that the structure of the organization that is established might have to be changed later.

Additionally, the rollout has a higher impact because on the immediate changes to repository owners. Q2 Cost estimation is highly significant for project planning by ensuring that there are no overrun costs while accurate estimates are made at all times. Cost estimation ensures that there is correct project planning, and every necessary service is well detailed. Estimation of cost of all resources should be put into the budget in order to avoid spoiling a certain contract. Some of these resources include building supplies.

Besides, cost estimation is pertinent because it helps the management to set realistic project milestones. For instance, the cost of constructing a particular foundation is pertinent because it helps the management to identify the amount that will be needed to commence the project. Therefore, each milestone should be well itemized and demonstrated in the plan. Q3 Hours needed Overhead charge Personal time rate Hourly rate Total Direct labor cost Jonathan 40 1.25 1.12 $15/hr 18.75 Susan 1.75 1.12 $21/hr 23.52 Debra 80 1.35 0 $11/hr 0 Bobby 55 1.80 1.13 $44/hr.