The process of cost estimation holds great significance in every field of life. Be it a home to run or a company project to complete project estimation is necessary everywhere.
Let’s suppose we are given the responsibility by our parents to run our home for a month within a fixed budget. Will we be able to do it in the absence of a full fledged cost estimation plan?? The answer is No.
Similarly, be it any project, cost estimation is required to be done in each and every project if we want that project to get completed in an effective and efficient manner.
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These days there are advanced estimating tools in the market which make it quite easy to estimate the cost of projects.
Every project requires some sort of resources to complete the project. The resources can be in any form say cement, sand, paper, wood, steel, iron or any other article. If we want to complete the project in an effective manner it is very important to estimate the cost for all resources and services.
If we do not estimate the cost of resources required, a situation of cost escalation may arise and then the project may start costing to us. This situation can lead us to losses. To prevent this, accurate cost estimates for all the resources must be made.
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Further, accurate cost estimates are also necessary for the effective and efficient completion of the project. For instance, if we start a project without estimating the cost of the project, and in the middle of the project we run out of our budget, then will the project reach its end point?
The answer is No. Therefore, for the completion of projects in an efficient and effective manner, accurate estimates of costs are very crucial.
Also, accurate cost estimates are necessary from the goodwill point of view. For instance, if a company is not practicing Project Cost estimation, then it will definitely run out of budget at some point of time.
Will a company ever have good reputation and goodwill if it runs out of budget every now and then?? The answer is No. Therefore, to conclude we can say that Project cost estimation is crucial to every field.