Discuss how the accuracy of cost estimates becomes more precise during a project.

Key concepts to be covered in the response could include, but are not limited to:

During project initiation, while the project charter is being created, very little detail is understood about the project, so the estimates are only approximate.

During the chartering process estimates are typically rough order of magnitude estimates that might also be described as ball park or conceptual estimates, which could underestimate the project costs by as much as -40 to +100.

As the project scope becomes well defined in the Work Breakdown Structure, schedules are planned, and specific resources are assigned, the project can be estimated with more precision, and the resulting budget estimate could have an accuracy level of -30 to + 50

Finally, at the end of project planning, after risk, quality, and other plans have been created, the project manager and team should be able to develop a definitive estimate, which has a range of no more than plus or minus 10 to 15, or even less depending on the organization.

The final project budget will be used to determine cash flow needs and will be used as the basis for controlling the project once it is in flight.