The Estimate add-in creates
a worksheet to hold the data for capital budget estimates
or life-cycle cost estimates.
Capital budgeting uses the Work Breakdown Schedule (WBS) to
organize the activities in a project. The WBS may have several
levels of detail. At the lowest level are work packages (WP).
Cost values are provided by the user for all WP's. A Summarize button,
computes the total cost of the project and of all activities
at the first level.
Life-Cycle costing uses the Cost Breakdown Schedule to
itemize the costs and revenues that will contribute to the
cash flows of the project during its life. Individual items
may be further subdivided into additional levels of detail.
Costs and revenues are estimated for the lowest level of detail.
A Summarize button, computes the total life-cycle
cost of the project and of all cost elements at the first level.
Individual estimates may be point estimates or described
by probability distributions. When probability distributions
are used the Random Variables add-in must be installed.
Summarized budgets and costs are described by the mean and
variance of the estimate. Monte Carlo simulation is used
to obtain more detailed distribution parameters of the summarized
The estimates allow for time phasing of budgets and costs
through a time table. In this way budget cash flows and life-cycle
cash flows are generated. Present worth equivalents of the
cash flows are provided.