Accurate Cost Estimates Tips
Since cost estimates become inaccurate because unknown factors haven't been accounted for, a good place to start for accurate cost estimates is by conducting risk identification and mitigation. The risks that you unearth have cost implications. If you discover the risk late in the project, naturally your cost estimate will get impacted. The point here is get the project risk management of the project sorted out before getting into cost estimation. Consider using a Risk Breakdown Structure.
Another thing about project cost estimates is that they vary with the phase the project is in. For example, if you are bidding for a project, you'd give a broad range because at this stage there are way to many unknowns. As the project progresses and you have scoped out the work, the accuracy of you estimate would increase. For more on this, refer to How Project Cost Estimation Evolves in Project Cost Management. The lesson here is if there are too many unknowns, let the cost estimates be broad.
Accurate cost estimates can also be achieved by using multiple methods of estimation. For example, you can use analogous cost estimation to a certain cost. At the same time you can use the Delphi method and compare the two results. Using multiple techniques helps in verifying the estimate.
Lastly, get some experts in. If your project involves a new technology, bring in subject matter experts and consultants. They may increase the cost of the project initially, however in the long wrong run you'd have recovered the cost. Expert knowledge is also useful in identifying risks and chalking out decision trees.