Cost Estimation Techniques

The estimation cost process takes the following inputs:-

• Scope baseline
• Project Schedule
• Human resource plan
• Risk register
• Enterprise environmental factors
• Organizational process assets

Depreciation is technique used to compute the estimated value of any object after few years.There are three types of depreciation techniques.

1. Straight line depreciation:-  The same amount is depreciated from cost each year.
2. Double declining balance:- In first year there is a higher deduction in the value-twice the amount of straight line. Each year after that the deduction is 40% less than the previous year.
3. Sum of year depreciation:- Lets say the life of an object is five years. The total of one to five is fifteen. In first year we deduce 5/15 from the cost, in second year we deduce 4/15, and so on.www.ebeescorp.com

Analogous Estimating technique:-Analogous estimating is an estimating technique with the following characteristics:-

• Estimates are based on past projects.
• It is less accurate when compared to bottom-up estimation
• It is top down approach
• It takes less time when compared to bottom-up estimation.www.ebeescorp.com
• It is a form of an expert judgment.

Parametric Modelling Estimation:-

• Regression Analysis is mathematical model based upon historical information.
• Learning curve:- learning curve model is based upon the principal that the cost per unit decreases as more work gets completed.

Bottom UP estimation:- It is same as WBS estimation. It involves estimating each work item and adding the estimates to get the total project estimate.