Week 9

Activity Cost Estimates Template

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Activity Cost Estimates

Company Name

Street Address

City, State Zip Code

Date

Activity Cost Estimates are a valuable project management tool for determining the costs for a project. Much like how a project’s work is broken down into activities and work packages, the activity cost estimate breaks the project’s costs down to the activity level in order to improve the reliability and accuracy of the estimate.

The activity cost estimate considers each project activity and the costs associated with completing the activity. These costs include direct costs for project resources, indirect costs which may be passed on to the project, and the amount held in contingency reserve for the activity. A given activity may have many resources allocated to it which all must be accounted for as part of the estimate for that activity.

One characteristic of the activity cost estimate is documenting how the estimate was determined. This is usually done by either analogous or parametric estimating. Analogous estimating is done using similar past projects or activities to estimate cost. Parametric estimating is done by determining and using a unit cost calculated over a duration or quantity of units. Parametric estimating is usually more accurate and should result in a higher confidence level.

Another characteristic of the activity cost estimate is that it often uses a range for the activity’s cost estimate as well as a confidence level. At different stages of project planning some activities may be more well-defined which may result in a much higher confidence level than that of an activity with more unknowns. It is important to note that like most project management documentation, the activity cost estimate should continue to be revised and improved throughout the project’s lifecycle.

In general, the more information and detail that is available for an activity, the more accurate the activity cost estimate will be. Once activity cost estimates are completed for all of a project’s activities, these can then be used to develop the overall project cost estimate.

Standard Activity Cost Estimates Template:

Activity Cost Estimates
Project:	Date:
WBS No.	Resource	Direct Costs	Indirect Costs	Reserve	Estimate	Method	Assumptions/ Constraints	Additional Information	Range	Confidence Level
This should be the WBS number from the Work Breakdown Structure	Type of resource (labor, material, equipment, service, etc.)	Costs directly related to project work (staff salaries, supplies, training, etc.)	Costs not directly attributable to the project (utilities, rent, security, etc.)	Amount of funding held in reserves for contingencies	Estimated cost	Method used such as parametric, analogous, etc.	Any assumptions used in developing the estimate such as labor cost per hour	Information on cost of quality, interest rate, or other	Range of estimate	The degree of confidence in the estimate based on available information

Example with Sample Data:

Activity Cost Estimates
Project: Flex Pay Database	Date: 03/01/20xx
WBS No.	Resource	Direct Costs	Indirect Costs	Reserve	Estimate	Method	Assumptions/ Constraints	Additional Information	Range	Confidence Level
3.1.1	Jr. Programmer for 40 hours	40 hrs @ $20.75 = $1,030	$0	$20.75	$1,050.75	Parametric	Must obtain functional manager approval to assign Jr. Programmer	N/A	$1020 - $1075	8
3.1.1	Network Specialist for 10 hours	10 hrs @ $26.90 = $269	$0	$53.80	$322.80	Parametric	Must obtain functional manager approval to assign Network Specialist	N/A	$300 - $350	7
3.1.1	Lease Network Test Equipment		12 hrs @ $42 = $504	$0	$504	Parametric	Assume test equipment will be available	Lease from Test Supply Corp.	$500 - $510	9

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