Understanding the preparation of a cost estimate and schedule

Whether you are preparing a response to an RFP or developing an internal initiative, estimation of the cost and the timeline for the project are key parts of the planning process. After identifying the tasks to accomplish the goals of the project, the cost and schedule for each task are estimated and reviewed before finalizing and eventually executing the project.

In IPP&E, each work breakdown structure (WBS) work package consists of multiple functional work packages. Each functional work package is assigned to a functional organization. That functional organization is then assigned the responsibility of estimating the level of effort necessary to execute the package and create the deliverables. In addition to the labor hours, the material and travel cost to accomplish the work is also estimated. All these estimates are reviewed and approved by the functional organization, the IPT for the program, and also the finance department.

The WBS work packages are then sequenced in a network of tasks, eventually feeding into the IMP criteria. The network diagram, along with the span time for each WBS work package, is used to generate a program schedule.

Based on the program schedule, the functional work package estimates are distributed to generate a monthly time-phased estimate for the project. This time-phased estimate and the labor rates are used to generate the program cost. This price and the schedule form the proposal for the project.