You can use one of three estimating methods to estimate cost totals (total cost: The calculated cost of a project, task, resource, or assignment over the life of the project.):
- Enter base rates or per-use costs (per-use cost: A set fee for the use of a resource that can be in place of, or in addition to, a variable. For work resources, a per-use cost accrues each time that the resource is used. For material resources, a per-use cost is accrued only once.) for resources (resources: The people, equipment, and material that are used to complete tasks in a project.), and fixed costs (fixed cost: A set cost for a task that remains constant regardless of the task duration or the work performed by a resource.) for individual tasks (task: An activity that has a beginning and an end. Project plans are made up of tasks.), and then have Microsoft Office Project 2003 calculate cost totals for resources, tasks, and the entire project. This method (known as bottom-up estimating (bottom-up estimating: An estimating method in which the base costs of individual work items or resources are calculated into task, resource, and project cost totals.)) should produce reliable and accurate results.
- Enter broad overall resource, task, and project cost totals based on past experiences and previous, similar projects. Although this method (known as top-down estimating (top-down estimating: An estimating method that uses the actual costs of a previous, similar project as the basis for estimating cost totals of a current project. This method is often used when there is limited information about the project.)) is quick to implement, it's generally less accurate than the bottom-up estimating method.
- Use a parametric model (parametric modeling method: An estimating method that uses project characteristics [parameters] in a mathematical model to predict project costs.), where costs are predicted based on project characteristics (parameters) in a mathematical model. Models can be simple (for example, using the cost per square foot to estimate the total cost of building a home) or they can be complex (for example, using multiple factors to estimate the total cost of home construction, such as the number of floors, windows, and doors). For complex parametric models, you may want to use Microsoft Office Excel 2003 to perform the calculations and then import the cost estimates into Project. For models using simple formulas, such as calculating a cost per square foot, you can use the formula capabilities of Project.