Cross estimating method
The cross estimating method is a technique that involves using data from similar completed projects to estimate the cost of a new project. It is often used when there is limited information available on the new project or when there are significant uncertainties in the project scope, schedule, or other variables.
The accuracy of the cross estimating method depends on the quality and relevance of the data used in the analysis. It is important to ensure that the completed projects used for comparison are truly comparable to the new project and that any adjustments made to the cost data are based on sound reasoning and reliable data sources.
The first step is to identify completed projects that are similar in scope, size, complexity, and other relevant characteristics to the new project. This involves conducting research on completed projects in the same industry, geographic location, and with similar project requirements.
Once similar completed projects have been identified, the next step is to collect cost data on those projects. This can include data on labour costs, material costs, equipment costs, overhead costs, and other relevant costs associated with completing the projects.
The cost data collected from the completed projects may need to be adjusted to account for differences in inflation, location, market conditions, and other factors that may impact the cost of the new project. For example, if the projects were completed several years ago, adjustments may need to be made for inflation.
Once the cost data has been collected and adjusted, the next step is to calculate the cost for the new project. This involves using the cost data from the completed projects as a benchmark and making adjustments based on the unique characteristics of the new project.
Finally, the cost estimate should be verified to ensure that it is reasonable and accurate. This can be done by comparing the estimate to other cost estimates for similar projects, conducting a sensitivity analysis to assess the impact of changes in key variables, and seeking input from experts and other stakeholders.
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