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Stage 2: Initiate the Project


What it is How to Templates/
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


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


Estimate on-going maintenance and support costs

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


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.


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.


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