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A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values. A problem with a cost overrun can be avoided with a credible, reliable, and accurate cost estimate. A cost ...
Cost engineering is "the engineering practice devoted to the management of project cost, involving such activities as estimating, cost control, cost forecasting, investment appraisal and risk analysis". [1] "Cost Engineers budget, plan and monitor investment projects. They seek the optimum balance between cost, quality and time requirements." [2]
The U.S. Government Accountability Office defines a cost estimate as, "the summation of individual cost elements, using established methods and valid data, to estimate the future costs of a program, based on what is known today", and reports that "realistic cost estimating was imperative when making wise decisions in acquiring new systems". [7]
Social costs are the sum of private costs and external costs. [ 7 ] For example, the manufacturing cost of a car (i.e., the costs of buying inputs, land tax rates for the car plant, overhead costs of running the plant and labor costs) reflects the private cost for the manufacturer (in some ways, normal profit can also be seen as a cost of ...
Basis of estimate (BOE) is a tool used in the field of project management by which members of the project team, usually estimators, project managers, or cost analysts, calculate the total cost of the project.
Cost estimation models are mathematical algorithms or parametric equations used to estimate the costs of a product or project. The results of the models are typically necessary to obtain approval to proceed, and are factored into business plans, budgets, and other financial planning and tracking mechanisms.
FAR defines a cost realism analysis as . The process of independently reviewing and evaluating specific elements of each offeror's proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique ...
In project management (e.g., for engineering), accurate estimates are the basis of sound project planning. Many processes have been developed to aid engineers in making accurate estimates, such as Analogy based estimation; Compartmentalization (i.e., breakdown of tasks) Cost estimate; Delphi method; Documenting estimation results; Educated ...
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