Apportionment method | Costs allocated to a specific segment of a project by using a percent of planned total cost—for example, framing a house might use 25 percent of the total cost, or coding a teaching module 40 percent of total cost.
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Contingency reserves | Usually an amount of money or time set aside to cover identified and unforeseen project risks.
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Direct costs | Costs that are clearly charged to a specific work packageusually labor, materials, or equipment.
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Function points | Points derived from past software projects to estimate project time and cost, given specific features of the project.
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Learning curves | A mathematical curve used to predict a pattern of time reduction as a task is performed over and over.
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Macro and micro estimating | Macro estimates are topdown, rough estimates that use surrogates to estimate project time and cost and are used to determine project selection or go-ahead decisions. Bottom-up micro estimates are detailed estimates of work packages usually made by those who are most familiar with the task.
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Overhead costs | Typically organization costs that are not directly linked to a specific project. These costs cover general expenses such as upper management, legal, market promotion, and accounting. Overhead costs are usually charged per unit of time or as a percent of labor or material costs.
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Phase estimating | This estimating method begins with a macro estimate for the project and then refines estimates for phases of the project as it is implemented.
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Ratio (parametric) methods | Uses the ratio of past actual costs for similar work to estimate the cost for a potential project. This macro method of forecasting cost does not provide a sound basis for project cost control since it does not recognize differences among projects.
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Time and cost databases | Collection of actual versus estimated times and costs of work packages over many projects that are used for estimating new project tasks and their expected possible error.
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Time-phased budgets | Planned costs that are broken down by distinct time periods (e.g., $5,000 per week) for a work package, as opposed to a budget for a whole job/project (6 months for a total of $130,000). Time phasing allows better cost control by measuring the actual rate of expenditure versus the planned expenditure rate over small pieces of the project.
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