Project Cost Estimate Template Excel

Forecasting the required budget of a project with a defined scope is a primary part of the PCM (Project Cost Management), which involves planning, monitoring and controlling all of the monetary costs associated with the project. 

Project Cost Estimate Template Excel
Project Cost Estimate Template Excel
This estimation is called PCE (Project Cost Estimation), and is used for assessing the worthwhile of a project and to budget for the entire project. After the forecast is approved and the project begins, it will be used to monitor the actual costs of the project.

The forecast is typically amended as the project progresses and the risks are realized, in an iterative process. The forecast includes all of the expected expenses: Labour, Materials, (Equipment, SW, and HW) and Other Costs (Facilities, Miscellaneous costs and a Contingency Fund).

Best Practices for Project Cost Estimation

  1. Document: Save the initial PCE, the changes which were made to it and their reasons and the actual PCE at the end of the project. Understanding which mistakes were made in the initial process will help bypass them in the next PCE put together.
  2. Communicate: Share the drafts of the PCE with the stakeholders, TL’s and choice employees. Their input can help with the accuracy of the final result, and will raise their commitment to it.
  3. Drill down when using units: Use work hours as opposed to work weeks and square meters of office space and not office floors.

  4. Don’t rush this stage of the project, thinking that extra budget will become available down the road if needed.
  5. Risks: Use a simple risk matrix while before putting together the PCE. They will help with estimating the needed hours of risky tasks.
  6. Contingency: Always plan for unknowns. Usually it is 10%-30% of the total budget, depending on the scope, innovation and the client. This will be further explained in the following chapter.
Project Cost Summary
Project Cost Summary

Project Contingency and Its Importance

As with any uncertain endeavor, planning for the unknown will protect the project when the actual is different from the plan. As stated above, the percentage of the contingency is normally 10%-30% and is dependent on the following 3 factors – 
  • Scope: The larger the scope and longer the timeline, the higher the percentage should be.
  • Innovation: If this is the first time that a project such as this is tried, the higher the contingency should be. This is the most important factor, and should give the largest weight of all three factors.
  • Client: The reputation of the client should also serve as a factor, and the more changes they requested in the past, the higher the contingency should be.

About the Project Cost Estimate Template

Total Costs”: This sheet is the bottom line of the estimated budget, and presents the total costs of the other three sheets. 

It also includes the basic info of the project (Date of submission, planned start and end date of the project, PM’s name and the project’s name).

Labour Costs”: This sheet needs to outline all the costs of human effort which are associated with the projects’ scope. The tasks are broken down according to the WBS, thus ensuring that 100% of the effort is outlined. 

Then the teams are required to estimate the number of work hours that are needed in order to complete the task.
Any other costs associated with employment, which vary according to the country the employee works in. Then the cost of hour is multiplied by the estimated hours needed to complete the task, and the result is the cost of completing the task.

The rows highlighted in green are the top tier activities of the WBS, and the total cost is derived of the aggregated total cost of the tasks under each one.

Project Costs
Project Costs
Materials Costs”: This sheet outlines all the costs of the resources needed for the project, which are usually tangible resources (Servers, equipment) but may include licenses of software. 

The number of servers is derived by the estimated number of end-users and required response time. The licenses needed are according to the employees. The office equipment depends on the number of employees, and is derived according to past expenses, plus 5-10% to adjust for inflation.
“Other Costs”: This sheet includes all the expenses which aren’t associated with the other two sheets. These are usually on-going expenses, which are needed for the “flow” of the project. 

The air expenses are derived from the estimated number of employees which will be required to conduct site / client visits. On top of that hotel and meal costs are added; according to the location (Sydney is more expensive than Bratislava). The office space is calculated according to the number of employees, when each employee requires X square meters for a work station. 

If many employees are planned to conduct site visits throughout the project’s timeline, then less office space is required. Refreshments and customer hospitality are derived according to the number of employees, planned customer visits and past costs of the same. The insurance costs are also derived from past costs, and these usually don’t change drastically.

No comments