Understanding Nonestimable Costs in Project Management

Nonestimable refers to costs that cannot be estimated with a reasonable degree of accuracy. These are costs that are too uncertain or unpredictable to be estimated, and they may not be possible to estimate until the project is completed. Nonestimable costs can include things like unforeseen events, changes in project scope, or unexpected delays.

For example, if a project manager estimates that a certain task will take 10 hours to complete, but then a critical component fails and the task takes 20 hours instead, the additional 10 hours would be considered nonestimable because it was not possible to anticipate the failure of the component.

Nonestimable costs are typically excluded from project budgets and schedules, as they can cause significant variances and make it difficult to accurately plan and control the project. Instead, contingency funds or reserve accounts may be established to cover these types of costs.