Thursday, May 15, 2008

Computerized Cost-estimating Tools

Whichever cost-estimating technique you choose for your project, you'll find that performing cost estimates manually can consume a lot of time and resources. If you feel you would rather be spending your valuable time actually managing your project, you'll want to consider using computerized cost-estimating tools.

Even the simplest tool can dramatically speed up cost estimating by totaling long columns or rows of figures in a split second. Which tools do you use in the workplace now? Perhaps you use a basic spreadsheet program, or you may use project management software.

A computerized spreadsheet of project costs allows for easy reference and analysis from a single page. Most basic applications also enable you to create simple charts and graphs for reporting purposes.

Project management software applications are specifically designed to aid in the planning and controlling of project activities. These programs are designed to make schedule and cost control much easier for project management teams.

Most software applications contain cost-estimating features that enable you to develop your cost estimates quickly and accurately. More details on how project management software can benefit your project are provided below.
  • Triangulation. Triangulation is the act of using two points in space to accurately position yourself. You can use your computer to run two or more sets of cost estimates using different approaches in order to verify and affirm their accuracy.
  • Simulation. There are some fairly sophisticated software products on the market that perform simulations. These programs enable you to develop various cost performance scenarios based on a few key inputs.
  • Integration. Computer software enables you to integrate your cost estimates with your company's coding system for cost accounts. Your project team will also benefit from having cost information about current and past projects available on-line through a computer network.
There is a range of project management software available, from low-end software you can use to manage simple projects to high-end software that will enable you to handle multiple or complex projects. You should choose the product that best meets your needs.
Computerized tools have a number of advantages when used in cost estimating. They can save you time and money in the following ways.

1. They can simplify the use of other costing techniques.
Computerized tools simplify the use of other cost-estimating techniques, including analogous estimating, parametric modeling, and bottom-up estimating. Cost estimating often relies on statistical analysis that is simplified by computers. Totaling and rolling-up costs is also quicker and more accurate if you use computerized tools. More details are provided below.
  • Analogous estimating. Analogous estimating means using the actual cost of a previous, similar project as the basis for estimating the cost of a current project. With the right software, you can easily use computerized databases to aid in cost estimating.
  • Parametric modeling. You know how well computers crunch mathematical formulas. Put this power to use if your project lends itself to parametric modeling as the best cost-estimating technique to use.
  • Bottom-up estimating. Even the most basic of applications can make bottom-up estimating much easier and faster. Automated spreadsheets would be ideal for totaling individual work items, and then rolling-up the individual estimates to find the project total.
2. They can calculate cost estimates quickly and accurately and enable you to perform simulations and "what if" analyses.
Computerized tools make preparing a variety of costing alternatives easy. You can decide which estimates are most feasible and achievable in the current project. Computer applications can also run simulations and do this much more quickly and accurately than most humans can.
Plus, you can use your computer to consider costing alternatives and to perform "what-if" analyses. For example, you could "ask" your software, "What if I add five percent to all production estimates?" or "What if I used this type of metal?"

Speed, accuracy, and the ability to run simulations are all characteristics that make computerized tools both time-savers and money-savers when developing cost estimates for a project.


elizabeth thomas said...

"Hi there,

Very nice post on project management tools.This post is very much helpfull for the project mangers to get their desired result from the project resources.Keep posting"

elizabeth thomas said...

I enjoyed reading your blog ~ thanks for posting such useful content on Project management tool.Nice article . Very nicely done!