ABSTRACT
An accurate estimate of project costs is necessary for subsequent management decisions and control. The most obvious reason for producing cost estimates is to assist in pricing decisions, but estimates are usually needed for all commercial projects, including in-house projects and those sold without fixed prices. The bottom item shows direct labour costs, which are all the man-hours that can be directly attributed to the project multiplied by their appropriate cost rates. In some companies, a labour burden is added, pro rata, to these costs to cover such items as National Insurance contributions and non-salary benefits. The cost estimator’s task is to use all the data and time available to produce the best estimate possible. The task list must include not only all the obvious items of project hardware, but also every associated software job. ‘Software’ is a very familiar term in the context of computers and IT projects, but projects quite remote from computer work have the software.
