Why Is Cost Estimation Important for Project Planning?

by Jackie Michael; Updated September 26, 2017
Project planning and cost estimation go hand-in-hand.

Project planning and cost estimation are vitally important to each other. When planning a project, such as building, costs can overrun seriously if correct estimates are not considered. Correct project planning details every summarized item and service required.

Resources and Services

Estimating the cost of all resources needed, such as building supplies, must be factored into the budget. Overestimating a budget for tendering a quote also can cost you a contract. Accurate planning of materials, labor charges, duration of the job and possible worst case scenarios shows forward planning as well as foresight.

Project Milestones

Planning managers need to acquire a detailed outline of each project milestone. For example, the cost of laying the foundation of a building is the first milestone. Setting the underground plumbing might be the second cost milestone. Each milestone should be systematically itemized, costed and laid out in the plan.

Labor and Sundries

Planning a project carefully factors in costs for labor charges and incidental contractors for items such as electricity and gas. These costs are sundry charges, which can be added in as extras to the over all work of the building project. These laborers may spend only one day on site but are necessary to structure of the planning and cost estimation.

About the Author

Jackie Michael has been a freelance writer since 2007. Her work has appeared on various websites, including Autos.com and CarsDirect. She holds a Bachelor of Arts in psychology and sociology from East London University.

Photo Credits

  • planning process image by Chad McDermott from Fotolia.com
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