What does cost estimate reconciliation involve?

Cost estimate reconciliation involves the process of comparing initial estimates of a project with the actual costs incurred during its execution. This process is crucial in assessing the accuracy of the cost estimates developed at the beginning of the project. By analyzing the differences between what was estimated and what was eventually spent, project managers and stakeholders can identify variances, understand the reasons behind any discrepancies, and improve future cost estimation techniques.

This reconciliation process helps in refining budgeting practices and enables better financial control throughout the project lifecycle. It also ensures that any lessons learned from cost variations can be documented for future projects. This level of analysis contributes to better forecasting, resource allocation, and overall project management effectiveness.