Question

Define project cost terms and tell how each is used in estimating project cost. Compare and contrast analogous, parametric, and bottom-up methods of estimating costs. Describe issues in project cost estimating and how to deal with each.

Answer 1

Answer:

The project cost is a cost required to procure all the needed products, services and resources to deliver the project successfully.

Explanation:

Analogous estimation: involves comparing a past similar project to your current project and the use of analogy to estimate cost.

Parametric Estimation: This estimation uses the historical data based on the real data and saves lots of time to calculate the cost estimation.  

Bottom-up approach: also called definitive technique breaks up all activities of the project to the micro level in order to conduct comprehensive cost estimation.

The issues in project cost estimation include cost overruns, inefficiencies and project surprise. To effectively mitigated them, Bottom-up approach should be applied. It is an expensive but very reliable method.