Cost estimates in project management are the approximations or predictions of what it will cost to complete a project, task, or activity. Cost estimates can be broken down into two types:
Rough Order of Magnitude (ROM): This is an initial estimate based on limited information that provides a rough idea of the potential cost. ROM estimates are often used in the planning stage when little is known about the scope and details of the project.
Definitive Estimate: A more precise estimate based on more detailed information gathered throughout the course of a project. Definitive estimates are typically created during later stages of planning when more specific and detailed data become available.
Some common techniques used to develop cost estimates include bottom-up estimation, top-down estimation, parametric modeling, and analogous estimating. The accuracy and reliability of these methods depend largely on factors such as experience level, current market conditions, technology trends, geographic location etc., but they all serve as important tools for ensuring accurate budgeting within projects.