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Now that you have the resource requirements, the work effort estimates, and the rate

for each task, you can complete the cost estimate by adding a Total Cost column to the
table. The cost of each task is calculated by multiplying the work effort for each
resource by the rate for that resource. This will give you the total project cost estimate.
Table 7.2 shows a completed cost estimate for the tasks in the sample project.

TABLE 7.2 Sample project cost estimate

Task Resource Work Effort Rate Total Cost

4.1.1 Tech writer 20 hours $30/hr $600

4.1.2 Programmers 100 hours $150/hr $15,000
4.1.3 Server Fixed rate $100,000 $100,000

4.1.4 Testers 60 hours $80/hr $4,800

4.1.5 Programmer 200 hours $150/hr $30,000

4.1.6 Marketing 30 hours $60/hr $1,800

Total $152,200

Three-Point Estimates

Three-point estimates are an average of the most likely estimate, the optimistic
estimate, and the pessimistic estimate. You should ask team members and/or ask

subject-matter experts who are familiar with this type of purchase or consulting work
to give you estimates. They should base these on their past experience with similar
work or their best guess based on their expertise.

The most likely estimate assumes that costs will come in as expected. If you are using
this to estimate activity durations, this estimate assumes work proceeds according to
plan, that there won’t be any obstacles, and that the team member is confident they

have the skills to complete the task.
The optimistic estimate is an estimate that is better than expected. For example, you

may have estimated internally that the consulting work you are requesting will be $225
per hour. The optimistic estimate might be $212 per hour, which is better than what
you expected. If you are using this estimate for activity duration, this estimate is the
fastest time frame in which your resources can complete the activity. This might
assume that other tasks the resource is working on are completed early or no longer

need to be worked on during the same time frame as the current task. It could also
mean that the work is easier than anticipated so the task could complete early.

The pessimistic estimate assumes the goods or services will cost more than expected. If
you are using this for activity duration, it assumes the work will take longer than
anticipated to complete or that obstacles will crop up along the way that will delay
completing the work.

Calculating the three-point estimate is straightforward. It’s an average of the sum of

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