When facing cost estimation for a project several methodologies can be used:
Expert Judgement Method
Expertise from individuals or groups with specialized knowledge or training in the team and physical resource planning and estimating, has to be considered, since the expert judgment, being guided by historical information, always provides valuable information about the environment and prior similar projects. Beyond this expert judgment allows determining whether to combine or not different methods of estimation and reconcilement between them.
Analogous Estimating Method
Analogous cost estimating technique, uses the values of scope, cost, budget, and duration or measures of scale for size, weight, and complexity from previous, similar projects as the basis for estimating the same parameter or measurement for a current project.
Parametric Estimating Method
Parametric estimating is based in an algorithm or the statistical relationship between historical data and other variables like square footage in construction to calculate resource quantities needed for an activity, based on historical data and project parameters.
Bottom-up Estimating Method
Bottom-up estimating is a method for estimating a component of work, where the cost of individual work packages or activities is estimated to the greatest level of specified detail. The detailed cost is then summarized or rolled up to higher levels for subsequent reporting and tracking purposes.
Project Management Information System Method
Project management information systems can include resource management software that can help plan, organize, and manage resource pools and develop resource estimates. Depending on the sophistication of the software, resource breakdown structures, resource availability, resource rates, and various resource calendars can be designed to assist in optimizing resource utilization.