What is the estimation process?
An estimate is a tentative number offered to the client by organizations in exchange for their services. It is not to be confused with a quotation which is a fixed price served by the service provider. During the estimation process, customers receive an overview of the project, its forecast, resources required, expenditure, potential risks, and timeline, to name a few.
Why should your organization follow an estimation process?
A business with a budget and an estimation process helps the leadership and the finance team understand how much the project will cost the company.
An estimate makes it easier for the stakeholders to align their resources and cash flow if they can get started immediately. It also helps teams and stakeholders optimize their cost-effectively and ensure their earning potential is higher than their CAPEX.
How to create and follow an estimation process?
Understand the tasks and resources required: Make an extensive list of jobs the project will entail. Then, based on these tasks, create a list of resources and other expenditures necessary for successful project completion.
Identify the workforce required for the said tasks: Chart your duties as per your team’s capacity.
Consider the timeline: It is time to estimate the timeline required for completing the project.
Calculate the cost in total: This is your estimation, where you add the cost involved in resources, manpower, and the timeline. This is the cost estimation you will share with your prospects/clients for approval.