Activity cost estimates refer to the quantitative process of assessing the possible costs to complete different activities involved in a particular project management strategy with the resource estimates and constraints in mind. It also involves creating financial plans, estimates, and budget. It also involves controlling the costs so that a particular project can be completed within the approved budget.
Activity cost estimating is executed using an activity list. This means that all pertinent activities related to a particular task or project are listed so that the cost for each activity can be determined. In project management, activity cost estimation uses different techniques but what matters in the entire process is that documents of the necessary activities are collected to create the estimates and arrive at a basic value.
During activity cost estimation, changes to the activities may also arise which can affect the entire cost estimate. To solve this problem, having a cost management plan is necessary to generate estimates for changing tasks as well as managing the changes. Without it, it is difficult for projects to even commence.
This project management term is defined in the 5th edition of the PMBOK.