Cost forecasts are estimates of future costs based on how the project is going now and what changes are expected. Cost predictions are made at the beginning of a project and adjusted as more information becomes available. Cost forecasts, on the other hand, are updated regularly throughout the project to represent changes in scope, scheduling, and other factors that can affect project costs. Here are a few important things you should know about cost forecasts:
- What cost forecasts are for: Project managers need cost predictions to keep track of project prices, spot possible cost overruns, and take appropriate action to keep the project on track.
- The basis for cost predictions: Cost forecasts are based on real project data, such as actual costs paid to date and work on project activities, as well as estimates about upcoming costs.
- Methods for making cost estimates: There are a number of ways to make cost estimates, such as earned value management (EVM), bottom-up estimating, and statistical modeling. EVM is a way that is often used to combine facts about cost, time, and scope to get an objective view of how well a project is doing.
- Key parts of cost forecasts: Cost forecasts usually have a few key parts, like the total cost of the project, how much it will cost to finish, and an estimate of how much it will cost to finish. These parts are based on how the project is going now and what changes are expected.
- The importance of cost predictions: Cost forecasts are essential to good project management because they help project managers spot possible problems early and take steps to fix them so the project stays on track. By changing cost estimates on a regular basis, project managers can make sure they have all the tools they need to finish the project on time and on budget.
In conclusion, cost forecasts are an important way for project managers to keep track of project prices, spot possible cost overruns, and take appropriate action to keep the project on track. By making accurate cost estimates and keeping them up to date, project managers can make sure they have all the tools they need to finish a project on time and on budget.
