Lesson
20

Project cost estimation for Sales opportunity

Success Problem

PM receives an request from Sales to estimate the future project cost based on very vague scope definition / unspecified schedule / unclear customer requirements. Still the requirement is to provide it on short notice as project cost estimation is essential for ongoing opportunity.

Impact

Impact of incorrect PM effort estimation of an existing Sales opportunity is very high. It can result worst case in a company's reputation damage -> very big financial loss.

Recommendation

Very important is that each estimation has to be done based on an baseline and using available PM cost estimation techniques. Ideally use more than one estimation method: Rough order of magnitude (ROM), Three-point estimating, Top-down estimation, Bottom-up estimation, Analogous estimating, Parametric estimating. And remember: Project manager is not a tool in Sales hands.

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