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Stage 2: Initiate the Project
 
 
Activities

 

What it is How to Templates/
Examples
 
 
How to: Develop a High-Level Budget

Principles for developing a high level budget
Estimating project costs involves a combination of science, logic, common sense and experience.  Listed below are several guiding principles to keep in mind:

  • Focus on the costs factors that depend on the needs of the specific project. (i.e., a system development project may have different costs than a project to install a new network.)
  • Refer to cost estimates of similar projects in the past that were accurate.
  • Solicit the opinions and feedback of project participants to get a broad spectrum of information, experience and opinion.

Recommended actions and strategies
The table below describes several ways to estimate project costs.                  

 

What to do

How to do it

1

Estimate the cost for each high-level milestone

Cost can be categorized as labor, material and other costs as appropriate.

Examples of cost factors:

    • Labor - Labor Rates
    • Material - Vendor Quotes
    • Material - Platform Site Cost
    • Other - Training Cost

2

Estimate on-going maintenance and support costs

Include estimates for on-going maintenance and support costs if this information is required for your project.

3

Estimate the costs at the level of detail you understand

If the project spans a long period of time, it is difficult to predict the estimate for work a year or more in the future. In this case provide an estimate for the entire project at a high level, and a detailed estimate for work for the next phase or period of time.

4

Identify the project cost by fiscal quarter and/or fiscal year

Determine the budgeting period based on the needs of your customer and the size of your project.

5

Document the basis for the cost estimates

Identify fundamental assumptions used to develop, calculate or explain the cost estimates. For example, the basis for calculating the labor cost might be a standard labor rate multiplied by staff hours.

 

 

 

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Updated February 1, 2006 - v1.0