Cost estimation is the basis of project management. In our day-to-day lives, we have to design several types of estimation lists or tools. Using Microsoft Excel, we can do such work so easily. In this article, we will demonstrate 5 easy and quick steps to create a project cost estimation example in Excel. So, letâ€™s go through the entire article to understand the process properly.

## Project Cost Estimation: Basics

Before starting a project, it must be planned out. Calculating a rough estimate of the project’s cost can avoid any unwanted problems. The purpose of cost estimation is to finish the project on schedule and on budget. Your investor can become impatient with the budget shortage. However, an incorrect project cost estimation results in a failed project. Your chances of sticking to your spending plan and completing a project on schedule increase with the accuracy of your estimations. So, from the above discussion, we can easily see that cost estimation is very important for any kind of project.

## 5 Steps to Create Project Cost Estimation Example in Excel

Creating a project cost estimation example in Excel could seem challenging at first, especially if you donâ€™t use the application frequently. No matter how simple or complex the estimation is, this step-by-step article will show you how to create a project cost estimator in an Excel spreadsheet that can be easily customized to meet your needs. Excel includes a huge selection of budgeting templates. But in this article, we will create this estimation spreadsheet in Excel from scratch. So, letâ€™s follow the steps to make a project cost estimation example in Excel.

Here, we have used the *Microsoft Excel 365* version; you may use any other version according to your convenience. Please leave a comment if any part of this article does not work in your version.

### Step 01: Create Basic Outline

At the very beginning, we have to create a basic outline of the cost estimation spreadsheet. This should be divided into two different parts. One is the short information about the project and the other is the cost calculation part. In the info area, we included the ** Project Name**,

**,**

*Project Number***er,**

*Project Manag***,**

*Client Name***of the Project in the**

*Start and End Date***B6:J8**range.

In the cost calculation part, we created a table to contain different cost components and their amount. Weâ€™ll calculate these amounts step-by-step in the following part of the article.

**Read More: **How to Perform Building Estimation and Costing in Excel Sheet

### Step 02: Estimate Phase-wise Total Cost

Basically, we divide a large project into multiple phases. Then, we complete the entire project by working out the tasks phase-wise. Letâ€™s see the process in detail.

- First, go to cell
**J13**and enter the following formula into the cell.

`=(D13*E13)+(F13*G13)+H13+I13`

Here, **D13** and **E13** represent the ** Units** and

**cost of**

*Per Unit***. Also,**

*Material***F13**and

**G13**serve as the

**and**

*Hours***cost of**

*Per Hour***. On the other hand,**

*Labour***H13**and

**I13**substitute the

**and**

*Fixed Cost***.**

*Miscellaneous Cost*- Then, press
**ENTER**.

- Secondly, apply the same type of formula for
and*Job 2*in cells*Job 3***J14**and**J15**respectively. Just, make sure to change the cell references. Like, write**D14*E14**instead of**D13*E13**.

- After that, calculate the total material cost for these
jobs. To do this, go to cell*3***D16**and insert the formula below.

`=SUMPRODUCT(D13:D15,E13:E15)`

Here, we used the **SUMPRODUCT function** to take two arrays (**D13:D15** and **E13:E15**) as arguments, multiply the corresponding values of all the arrays, and then return the sum of the products.

- As always, press
**ENTER**.

In a similar way, we can calculate the ** Total Labour Cost**. And, just use the

**SUM function**to calculate the

**and the**

*Total Fixed Cost***of this phase.**

*Total Miscellaneous Cost*Now, weâ€™ll compute the ** Total Estimated Cost** of

**.**

*Phase A*- At this moment, select cell
**J16**and write down the formula below.

`=SUM(J13:J15)`

- As usual, press
**ENTER**.

Alike, you can calculate them for ** Phase B** and

**as well.**

*C***Read More: **How to Calculate Residential Construction Cost Estimator in Excel

### Step 03: Calculate Total Estimated Project Cost

In this section, weâ€™ll determine the totals of each different cost component and also the out-and-out total estimated cost of the entire project.

To calculate the ** Total Material Cost** of the project,

- Firstly, select cell
**D25**and paste the following formula.

`=SUM(D16,D20,D24)`

- Afterward, press
**ENTER**.

- Correspondingly, do the same for
,*Labor*and*Fixed,*costs also.*Miscellaneous*

Finally, weâ€™ll figure out the total cost of this project by adding all the estimated costs of every project.

- So, select cell
**J25**and put down the formula below.

`=J16+J20+J24`

- Then, tap
**ENTER**.

**Read More: **How to Make an Effort Estimation Sheet in ExcelÂ

### Step 04: Insert Chart to Aid in Visualization

Chart is a great tool for visualization. We can easily understand a large amount of data or info easily with the help of charts. So, weâ€™ll insert some charts to achieve different aspects of this estimation. Let us go through the following steps.

- Initially, navigate to the
**Insert**tab. - Then, click on the
**Insert Pie or Doughnut Chart**drop-down icon. - Following this, select the
**Pie**chart from the**2-D Pie**section.

Immediately, we can see a blank chart on the sheet.

- Just change the chart title and give a suitable one.

- Right now, right-click anywhere inside the chart area to open the context menu.
- From the menu, click on the
**Select Dataâ€¦**option.

- In the
**Select Data Source**dialog box, tap on the**Edit**button under the**Horizontal (Category) Axis Labels**section.

As axis labels, we want to show the different cost components like material cost, labor cost, etc.

- So, on the
**Axis Labels**dialog box, select those cells (**D10**,**F10**,**H10**, and**I10**) to get the value in the**Axis label range**box. - Also, click
**OK**.

The labels are now present here in the box.

- Just click
**OK**.

- Again, bring the
**Select Data Source**box. - We renamed the series as
**Cost**. Now, select it and click on the**Edit**button.

Instantly, the **Edit Series** box will pop up.

- Here, give the cell references of the total amount of different cost components. For example,
**D25**has the total material cost, and**F25**has the total labor cost. - Then, click
**OK**.

- Lastly, click on the
**OK**button.

Now, we can see a blank chart like the following.

Similarly, we inserted another **Column Chart** to plot the phase-wise cost of the project.

### Step 05: Verify with Sample Data

We have completed creating the whole template. Now, we have to put the numbers down.

- Here, we inserted sample data in the blank cells and the results are before our eyes.

The charts are in the following states now.

**Read More: **How to Do Interior Estimation in Excel

## Free Template of Project Cost Estimation [Ready to Use]

In the above section, we tried to show how we created this template. You can use it instantly by just downloading the Excel file. You just have to write down your values in the light-blue-colored cells.

Itâ€™s completely free. Just download and use it.

**Read More: **How to Make House Estimate Format in Excel

## Things to Remember

📌 **#N/A! error** arises when the formula or a function in the formula fails to find the referenced data.

📌 **#DIV/0! error** happens when a value is divided by zero (0) or the cell reference is blank.

You may download the following Excel workbook for better understanding and practice.

## Conclusion

This article explains how to create a project cost estimation example in Excel in a simple and concise manner. Thank you for reading this article. We hope this was helpful. Please let us know in the comment section if you have any queries or suggestions.

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