A Guide Line To Perform

EPC Project Contract Cost Estimation

Held by : FARAGOSTARAN
Present by: Hassan Mirzaie Date : 11 January 2007 Location: Simorgh Hotel Tel. & Fax : 021- 8870 29 24 , 8870 45 84

In the Field of Oil, Gas & Petrochemical Industries

No Body Plans to Fail, But Fails to Planning!

EPC Key Approach

EPC Project Contract Cost Estimation Contractors Know-How For EPC Project Executing Project Work Break Down Structure (WBS) Identifying and Managing Risks in EPC Projects Managing & Control of Project Changes in EPC Projects Engineering & Design Phase Documents Flow Diagram EPC Project Management

A Guide Line To Perform

EPC Project Contract Cost Estimation

In the Field of Oil, Gas & Petrochemical Industries

Seminar Approach
1. 2. 3. 4. 5. 6. 7.

EPC Project Definition Functional WBS Code for EPC Project Methodology and Flow of Cost Estimating Main Questions to be Asked to Cost Estimate Why People Get Estimating Wrong Risk Related Cost Estimating Summary

1. EPC Project Definition

Performing Preparation License

of Feasibility Study of Bid Documents

Agreement and Engineering Design (Basic, FEED & Detail Activities) / Erection and Pre-Commissioning and Start-up

Procurement Construction

Commissioning Training

EPC Project Flow Diagram

Planning Phase Project Definition Phase Implementation Phase

Feasibility Study

PMC/Engineer Selection

Process/ Basic Design

Marketing/Sales Approach Bidding Strategy Partnering

Project Execution

Define Scope

ITB Preparation

Evaluation & Clarification

Engineering Design

Procurement /Supply

Funding / Budgeting

ITB Bid Evaluation & Clarification Bid Negotiation Letter of Intend

Contract Negotiation & Signing

Site Survey & Clarification

Cost Estimate & Bid Submission

Construction

Typical Weight Percent of An EPC Project

Item
1 2 3 4 5 6 7

Description
Feasibility Study License & Engineering Procurement Construction Pre-Com Commissioning and Start-up Training Logistic and Others

% Range
1 7-10 50-60 20-25 2 1 1

2. Functional WBS Code for EPC Project

EPC Project

Prefossinal Services

Materials

Labor Work

Transportation

Direct / Indirect Expenses

Others

Professional Services
Professional services
Project MGT Detail Engineering Quality MGT Comm. & Operation Training Basic Engineering Procurement Const. MGT & Supervision Project Administration Others

Professional Services (1/2)

Project Management and Control
Project Directing, Organization and Stuffing, Project Planning and Control, Project Coordination, Estimating, Management Support

Basic Engineering
Process Design, Plant Safety, Instrumentation, General Civil, Plant Layout and Piping Specification

Detail Engineering
Civil and U/G, Structure, Building, Equipment, Piping, Instrumentation, Electrical, Paint AND Insulation,

Procurement
Procurement General, Purchasing, Subcontracting, Expediting, Traffic and Custom Clearances

Professional Services (2/2)

Quality Management
Quality Assurance, Quality Control, Shop Inspection, Field Inspection, Maintenance Inspection, Plant Diagnosis

Construction Management and Supervision

Construction Management and Super-intendance, Planning,Field Controlling, Field Installation Supervision, Field Technical Support, Field Engineering, Subcontracting Administration

Commissioning and Operation

Commissioning and Operation General, Pre-commissioning, Commissioning, Operation Services

Project Administration
Administration General, Personnel Control, Project Accounting, Communication and Correspondence, Document Handling, Camp Organization, General Affairs

Materials
Materials

Direct Materials

Ind. Mat. for Tem. Facilities

Spare Parts

Others

Materials
Direct Materials
Civil Materials, Structure Materials, Building Materials, Equipment, Piping and Bulk, Instrumentation, Electrical, Insulation and Painting,Fire Proofing and Surface Protection, Catalysts, Chemicals, and Utilities

Indirect Materials
Temporary Building, Utilities and Telecommunications, Housing Equipment and Furniture, Shop Equipment and Tools,Common Scaffolding, Canteen

Spare Parts
spare Parts for Commissioning and Start-up, Spare Parts for Operation (2 Years)

Labor Work
Labor Work
Ind. Lab. Work for Temp. Work

Direct Labor Work

Indirect Field Operation

Supervisory

Construction Equipment

Others

Labor Work (1/2)

Direct Labor Work
Civil General, Concrete Structure, Steel Structure, Building, Equipment Installation, Piping, Instrumentation, Electrical, Insulation and Painting, Fire Proofing and Surface Protection, Catalysts, Chemicals and Utilities, Others including System Test Preparation

Indirect Labor Work For Temporary Facilities

Temporary Building, Utilities and Telecommunications, Housing Equipment and Furniture, Assembling of Shop Equipment and Tools, Installation of Common Scaffolding, Canteen,

Indirect Field Operation

Commissioning and Operation, Project Administration

Supervisory
Civil General, Concrete Structure, Steel Structure, Building, Equipment Installation, Piping, Instrumentation, Electrical, Insulation and Painting, Fire Proofing and Surface Protection, Catalysts, Chemicals and Utilities

Labor Work (2/2)

Construction Equipment
Construction equipment, Operator and Driver

Transportation
Transportation

Onshore

Offshore

Ocean Frieght

Others

Transportation
Offshore
Packing, Handling, Transportation, Shipping and Custom Clearances

Ocean Freight
Ocean Freight, Air Freight

Onshore
Packing, Handling, Transportation,

Direct and Indirect Expenses

Home and Branch Office Expences Financial Charge Tax and Duties Third Party Inspection Charge Agent Fee

Field Office Expenses Insurance Licensors Charge Consultant Fee Others

Direct and Indirect Expenses (1/2)

Home and Branch Office Expenses
Traveling and Traffic Charge, Telecommunication Charge, Office Charge,Social Charges, Miscellaneous Charges

Field Office Expenses

Traveling and Traffic Charge, Telecommunication Charge, Office Charge,Social Charges, Miscellaneous Charges

Financial Charge
L/C Charge, Bond Charge, Interest Charge

Insurance
Governmental Insurance, Transport Insurance, Travels, Accident Insurance, Social Insurance, Construction Insurance, Provisional Liability Insurance

Direct and Indirect Expenses (2/2)

Tax and Duties
Import Duties, Corporate Charge

Licensors Charge
Royalty, Know-How Fee, Basic Design Fee, Design Checking Fee, Operation Charge

Consultant Fee
Engineering Consultant Fee, Training Consultant Fee, Accountant Fee, Lawyer Fee

Others
Others

Rate Difference

General Overhead

Contingency

3. Methodology and Flow of Cost Estimating

3.1

Definition of Cost 3.2 Type of Costs 3.3 Cost Estimation Methodology (Tools and Techniques) 3.4 Cost Estimation Templates for EPC Project

3.1 Definition of Cost

A Resource (People, Equipment, et.) which Foreseen to Achieve a Specific Objective Cost Estimating Should be Based on a WBS to Improve Accuracy Cost Estimation Includes all the Work Needed to Complete the Project Including: Quality Efforts, Risk Efforts, Management Time Cost Estimates are Generally Expressed in Units of Currency (Dollars, Euro, Rials,etc.,)

3.2 Type of Costs (1/2)

Variable Costs: Any Cost that Changes With the Amount of Production or the Amount of Work. Examples Include the Cost of Material, Supplies, Labor, etc. Fixed Costs: Costs That Do Not Change as Production Changes. Examples Include Set-Up, Rental, etc. Direct Costs: Costs That Are Directly Attributable to the Work on the Project. Examples are Team Travel, Recognition and Rewards, Cost of Materials, Training Indirect Costs: Overhead Items or Costs Incurred for the Benefit of More Than on Project. Examples Include Taxes, Benefits, Insurances, etc. Opportunity Costs: Net Present Value of a Project. Is Really a Choice to Do / Not to Do a Project

3.2 Type of Costs (2/2)

Type of Guest

Accuracy Rate
-25% to 75% -10% to 25% + or 15% + or 5%

Rough Order of Magnitude (ROM) Budgetary Approximate Estimate (Informational) Definitive (Based on Detailed Information)

3.3 Cost Estimating Methodology (Tools and Techniques)

3.3.1

Analogous or Top-Down 3.3.2 Parametric or Bottom-Up 3.3.3 Cost Budgeting

3.3.1 Analogous or Top-Down Estimating (1/2)

Uses the Actual Cost of a Previous, Similar Project as the Basis for the New Estimate Advantages:
Quick Activities Need not be Identified Less Costly to Create

Disadvantages:
Less Accurate Estimates are Prepared with a Limited Amount of Detailed Information and Understanding of the Project Requires Considerable Experience to Do Well Extremely Difficult for Project With Uncertainty

3.3.1 Analogous or Top-Down Estimating (2/2)

Examples:
Estimation of Engineering Man-Hour from Previous Projects Weight Of Piping Bulk Materials Cost of Temporary Equipment to be Used During Construction

3.3.2 Parametric or Bottom-Up Estimating (1/2)

Estimate Individual Work Items and Sum Them to Get a Total Estimate Advantages:
More Accurate Gains Buy-In From Team Because the Team Creates Estimates the Can Live With Has Been Prepared Based On a Detailed Analysis of the Project Provides a Basis for Monitoring and Controlling, Performance Measurement and Management

Disadvantages:
Takes Time and Expenses Tendency for the Team to Pad Estimates Unless Taught About Reserves Requires that the Project be Well Understood Requires Time to Break the Project Down into Smaller Pieces

3.3.2 Parametric or Bottom-Up Estimating (2/2)

Examples:
Detailed Estimation of Cost of Engineering Manpower, Equipment, Materials, Construction Fee Based on Conceptual Design Information and Document.

3.3.3 Cost Budgeting

3.3.3 Cost Budgeting

A Budget is Merely a Compilation of the Individual Cost Estimates. Management Reserves: Extra Amount of Funds to be Set Aside to Cover Unforeseen Risks or Change in the Project Contingency Reserves: Percentage of the Subtotal of the Cost of Project Items, Supplemental Work, Materials and Expenses

General Methodology
Establish rules for C/S & define assumptions Set up tools and format for data input Establish C/S Coordinator for each Work Package Create Technical Requirements Document Develop Technical Conceptual Design

Create the WBS Estimate Cost & Schedule and create the BOE Develop the RLS and Mgmt Docs

C/S = Cost & Schedule WBS = Work Breakdown Structure BOE = Basis of Estimate RLS = Resource Loaded Schedule

Review
Yes Report from GG5, Dec. 20, 2005 Fund Starts

No

Interpret this Core Cost in each Region

3.4 Cost Estimation Templates for EPC Project (1/2)

A Commercial Proposal for an EPC Project Normally Includes Following Sections:

Engineering
Man

Power (Basic Engineering, Endorsement, Detail Engineering) Consumable Office and Furniture Management Overhead Contingency

Procurement
Procurement

Engineering and Man Power (Technical Doc. Preparation and Material requisition, Bidder Clarifications, Proposal Evaluation (Technical, Commercial, Expediting and Inspection) Equipment (LC Opening, Purchase Order, Manufacturing, Test and Inspection) Bulk Materials (LC Opening, Purchase Order, Manufacturing, Test and Inspection) Logistic (Shipment, Custom Clearances and Delivery to Site)

3.4 Cost Estimation Templates for EPC Project (2/2)

Insurance Provisional

Cost Overhead and Contingency

Construction
Site

Preparation Site Establishment Plant Construction Safety and Security Camping Pre-Commissioning Commissioning Management Man Power Contingency Construction Insurance

EPC Cost Weight Percent

Description % (Sub) (Total) % Remarks 8.5 Engineering Man Power 66 Engineering Team Consumable 7.5 Stationary, Doc. / Dwg. Office and Furniture 8.5 Soffice Included all Stationary Equipment Management 5 Overhead 8 Taxes, Duties, Social Fees Contingency 5 64 Procurement Equipment 65 Mechanical, Electrical, Instrument Bulk Materials 18.5 Piping, Steel Str., Inst., Ele., Paint, Ins., F&G, Chem., C Logestic and Custom Clear 4 Transp, Costum Du, Insp, Load and Unload, Heavy Li Man Power 2.8 Insurance 0.7 Financial and Logestic Insurance Office Rent, Consumables Overhead and Contingency 0.5 Provisional Cost 8.5 2 Years Spare Part, Duties 27.5 Construction Site Preparation 5 Site Preparation and Site Access Site Establishment 2 Mobilization / Demobilization, Workshop, Spool Shop Plant Construction 70 Civil, Structures, Mechanical, Electrical, Inst. Installat Safety and Security 2.5 HSE, Guard Housing, Fire Station, First Aid Camping 8.5 Camp, Catering, Transportation Pre-Commissioning 2 Mechanical Complition, Test Packages Commissioning 2.5 Test Running, Performance Test, Vendor Specialist Mangement Man Power 1.5 Contingency 5 Construction Insurance 1 Full Risk Total 100

Actual

Finishin g Period

Early Pla 0

PROGRESS

100

10

20

30

40

50

60

70

80

90

0 May-2005

May-2005 Jun-2005 July-2005 Aug-2005 Sep-2005

Jun-2005

July-2005

Early Plan Actual

Aug-2005

Sep-2005

11

Oct-2005 18 Nov-2005 26 Dec-2005 37 Jan-2006 48.2 Feb-2006 59.8 Mar-2006 72 Apr-2006 83 May-2006 90.9 Jun-2006 96 July-2006 98 Aug-2006 99 Sep-2006 100

Oct-2005

Nov-2005

Dec-2005

Jan-2006

Cummulative Plan Progress

Overall S Curve

MONTH Feb-2006 Mar-2006 Apr-2006 May-2006 Jun-2006 July-2006 Aug-2006 Sep-2006 Oct-2006

Oct-2006

Actual

Finishing Period

Early Plan

PROGRESS 100.00 10.00

May-2005 3.40 12.81 Jun-2005 24.00 July-2005

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00 May-2005 Jun-2005 July-2005 Aug-2005 Sep-2005 Oct-2005 Nov-2005 Dec-2005 MONTH Jan-2006 Feb-2006 Mar-2006 Apr-2006 May-2006 Jun-2006 July-2006 Aug-2006 Sep-2006 Oct-2006

Early Plan Actual

34.00 43.00

Aug-2005

Sep-2005

Oct-2005

Nov-2005 Dec-2005 Jan-2006 Feb-2006 Mar-2006 Apr-2006 May-2006 Jun-2006

Engineering S Curve

Cummulative Plan Progress

51.50 60.00 70.30 78.70 80.01 84.27 88.31 90.40 91.09 91.60 92.05 95.80 100.00

July-2006 Aug-2006 Sep-2006

Oct-2006

Actual

Finishing Period

Early Plan

PROGRESS 100.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 0.00 May-2005

0.00 May-2005

Jun-2005

0.00

Jun-2005

July-2005

0.00

Early Plan Actual

July-2005

Aug-2005

0.00

Aug-2005

Sep-2005

1.35

Sep-2005

Oct-2005

7.95

Oct-2005

Nov-2005

15.14

Nov-2005

Cum m ulative Plan Progress

Procurement S Curve

MONTH Dec-2005 Jan-2006 Feb-2006 Mar-2006 Apr-2006 May-2006 Jun-2006 July-2006 Aug-2006

22.77 34.54 46.64 59.25 72.14 84.51 94.15 98.58 100

Dec-2005

Jan-2006

Feb-2006

Mar-2006

Apr-2006

May-2006

Jun-2006 July-2006 Aug-2006

Early

Actual

Finishing Period

PROGRESS

0.00 May-2005

100.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00

0.00

Jun-2005

May-2005

0.00

Jun-2005

July-2005

0.35

July-2005 Actual

Aug-2005

6.20

Early Plan

Aug-2005

Sep-2005

12.35

Sep-2005

Oct-2005

20.11

Oct-2005

Nov-2005

28.54

Nov-2005

Dec-2005

37.54

Dec-2005

Jan-2006

Jan-2006

47.04

Feb-2006

Cummulative Plan Progress

Construction S Curve

MONTH Feb-2006 Mar-2006 Apr-2006 May-2006 Jun-2006 July-2006 Aug-2006 Sep-2006 Oct-2006

57.14 67.88 77.48 84.12 89.15 94.16 97.17 100

Mar-2006

Apr-2006

May-2006

Jun-2006

July-2006

Aug-2006

Sep-2006

Oct-2006

Engineering Man-Hour Estimation

Description Specifications / Manuals Standard Drawings Calculation Notes Drawings Data Sheets Sketches Inspection and Test Plan Vendor Document Review Form Bid Evaluation Vendor Drawing / Document Review Construction Tender Documents QA Documentation Coordination Activities Man-Hour Qty Doc / Dwg Unit Man-Hour Size Sheets Eng. Draft. Eng. Draft. Total

Equipment Cost Estimation

Description Drums Columns / Towers Reactors Exchangers Air Coolers Tanks Filters Heaters Furnaces Flares Ignitor Packages Incinerators Reformers pumps Compressors Gas Turbines Steam Turbines Diesel / Gas Engines Packages Miscellaneous Cost Qty Loc. Loc. For. For. Gr. Com. 2Y. Inst. Inter. Cod. Dim. Wgh. Wgh. Mat. Tot. Spa. Spa. Mat. Est. Op. Tr.

Bulk Material Cost Estimation

Description Bulk and Piping Mat. Electrical Equipment Electrical Bulk Instrument Eq. Instrument Bulk Steel Structures Supports Paint Insulation Other Coating Mat. Fire and Gas Fire Fighting General Building Miscellaneous Cost Qty Loc. Loc. For. For. Gr. Com. 2Y. Inst. Inter. Cod. Dim. Wgh. Wgh. Fab. Mat. Tot. Spa. Spa. Mat. Est. Est. Tr.

Chemical / Catalyst Cost Estimation

Aso. Pck. Description Eq. Tag. No. Chemical Catalyst Fill. Y. Init. F. Fir. Y. Fill. Y. Consumption Init. First Qty. Qty. Transpor tation Init. First Loc. Supp. Init. F Fir. Y. Cost Gr. Inst. For. Supp. Init. F. Fir. Y. Tot.

Construction Cost Estimation

Description Excavation and Backfilling Concrete Works Reinf. Con. Process Buldg & Fin. Protection of Buried Cables / Pipes Drainage System Asphalting, Ballasting & Dickes Underground Piping Erection of Fixed & Floating Roof Tanks Prefab. of Large Bore Piping (2" and Above) Prefab. And Erection of Pipe Support Erection of Steel Structure Erection of Fixed Equipment and Heat Exch. Erction of Large Bore Piping (2" and Above) Prefab. And Erction of Small Bore Piping Erection of Machinery and Packages heavy Equipment Erection (90 Tons and Above) Erection of Internal Parts of Equipment Installation of Earthing System Electrical Cables Laying and Connections Plant Lighting System Panel Installation inControl Room / Substation Cathodic Prtection Electrical / Instrument Cable Tray Field Installation of Instrument Pneumatic / Electrical Connections Painting of Piping, Equipment and Tanks Insulation of Piping, Equipment and Tanks Unit M3 M3 M3 M3 M3 ID Ton ID ID Ton Ton ID ID Ton Ton Ton Unit L.M Unit Cu. L.M L.M Unit Unit M2 M2 Qty Man-Hour Av. Unit Price Price P.W (%)

Indirect Machinery Distribution

SL. No. Description Batching Plant Truck Mixer Loader Truck Mixer Excavator Roller Grader Water Tanker Btumen Car Finisher Craner 800 Ton Craner 250 Ton Craner 100 Ton Craner 45 Ton Craner 30 Ton Craner 20 Ton Craner 15 Ton TIG Welding Set Diesel Welding Machine Air Comp.250 (CFM) Air Comp.450 (CFM) Stress Relieve Set Sand Blast Set Airless Spray Set Tractor With Trailer Lift Truck 10 Ton Lift Truck 5 Ton Trailer Diesel Generator 50 KW Diesel Generator 150 KW Pick Up Van Patrol Mini Bus Bus Ambulance 1 2 3 4 5 6 7 8 Month Total 9 10 11 12 13 14 15 16 17 18 M/M

Direct Manpower Distribution

Description Foreman Tank Fabricator Code Welder S/S Welder Steel Erector Burner Scaffolder Mill Wright Machine 1 Machine 2 Helper Labour Civil, Building and Structure Foreman Mason Carpenter Barbender S/S Welder Blacksmith Helper Labour Month Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 M/M Static & Rotary Equipment

Direct Manpower Distribution

Description Foreman S/S Welder Scaffolder Sand Blaster Electrician 1 Electrician 2 Helper Labour Instrumentation Foreman S/S Welder Instrument Fitter 1 Instrument Fitter 2 Scaffolder Electrician Helper Labour Month Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 M/M Electrical and Telecommunication

Direct Manpower Distribution

Description Foreman TIG Welder Code Welder S/S Welder Steel Erector Burnerman Pipe Fitter Mechanic 1 Mechanic 2 Stress Relive Tech. Scaffolder Blacksmith Wrapping Man Helper Labour Insulation Foreman Scaffolder Insulator TIN Smith Helper Labour Painting Foreman Painter Scaffolder Sand Blaster Helper Labour 1 2 3 4 5 6 7 Piping Month Total 8 9 10 11 12 13 14 15 16 17 18 M/M

Indirect Manpower Distribution

Description Project Director Site General Manager Secretery Contract Administrator Coordinator Senior Safety Engineer Plan. & Project Cont.Manager Cost Controller Planner Project Controller Planning Reporter S/S Superintendent S/S Engineer S/S Technician Surveyour Surveying Worker Mechanical Supperintendent Mechanical Engineering (Rotary) Mechanical Technician (Rotary) Mechanical Engineering (Static) Mechanical Technician (Static) Month Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 M/M

Indirect Manpower Distribution

Description Piping Engineering Piping Technician Electrical Supperintendent Electrical Engineering Electrical Technician Instrument Superintendent Instrunment Engineering Instrument Technecian Paint and Insulation Technecian QA /QC Supervisor QA /QC Staff Field Eng. & QC Manager Technical Office Staffs Draftsman Document Center Senior Officer Document Center Officer Stress Relieve Staff NDT Staff NDT Worker Precommissioning manger Precommissioning Engineer Precommissioning Technecians Commissioning Manger Commissioning Engineer Commissioning Technecians Month Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 M/M

Indirect Manpower Distribution

Description Training Manger Training Engineer Training Technecians Proc.t & Stores Superintendent Store Supervisor Store Controller Store Worker Buyer (Site) Buyer (Home Office) Adm. & Finance Superintendent Administration Staff Accounting Camp Service Officer Site Service Officer Nurse Watchman Teaman Cleaner Chief Cooker Cooker Postman General Helper General Worker Month Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 M/M

4. Main Questions to be Asked to Cost Estimate

Were Historical Data Used? Were Inflation Rates Used? Were Project Scope Definition Have Been Completely Understood and Interred in the Cost Estimating Formats? Were Geometrical and Site Condition Completely Understood? Were Codes and Standards Have Been Clarified? Were Any Regulation to be Followed During Contract Have Been Asked From Client? Were Training Requirements for Client Personnel Have Communicated? Is There Any Client Facilities during Contract Execution?

5. Why People Get Estimating Wrong?

Over Optimistic Nothing Will Go Wrong Underestimating Things Like Control the Activity, Coaching, Supervision, Project Meeting Lack of Understanding of Project Scope Ignoring Reality Assuming Nothing Will Change Just Guessing Estimating Isnt a Managed Activity! Junior People Involvement Cross Section Communication During Estimation Time Double Estimating Unclear Scope of Supply Between Procurement and Construction Department Underestimating Cost of Temporary Facilities, Consumables, Tools, etc., for Construction, Pre-commissioning, etc. Lack of Good Relations With Subcontractors (Vendors) Giving Gold Plating Instead of Following Scope

6.Risk Related Cost Estimating

Type

/ Complexity of Project Procurement Restriction and Law Client / Contractor Resources (personnel, etc.,) Project Schedule Clients / Contractors Ability to Finance Project Scope Changes Design Criteria

7.Summary (1/2)

Project Cost Management / Estimating is Primarily Concerned with the Cost of the Resource Needed to Complete a Defined Activity. Project Cost Management Should Also Consider the Effect of Project Decisions on the Cost of Using, Maintaining, and Supporting the Product, Service, or Result of the Project. Project Cost Estimating Consider the Information Requirements of the Project Stakeholders. Different Stakeholders will Measure Project Costs in Different Ways and Different Items. On Some Projects, Especially Ones of Smaller Scope, Cost Estimating and Cost Budgeting are so Tightly Linked that are Reviewed as a Process that can be Performed by a Single Person.

7. Summary (2/2)
Some Organizations have Predefined Approached to Cost Estimating. Where these Exist, the Project Operates Within the Boundaries Defined by the Policy Cost of Quality Should be Also be Used to Prepare the Schedule Activity Cost Estimate.

Thank You