Development cost prediction

Predicting how much an activity costs and when these costs will occur is of fundamental importance to assessing the feasibility of a project. Furthermore if it is decided to proceed with a project these estimates can be used to generate the budget for the project, to ascertain what a fair price would be if the work was to be undertaken by a contractor, as an indirect indicator of the quality of bought goods, materials and services and as a tool in the cost and time control in project management. Early on in projects many assumptions will be needed on the characteristics of the project itself and on how external influences will affect the feasibility of the project, such as Government policy, currency exchange rates and inflation. It is important to record such assumptions formally and in detail so that at later stages it can be seen readily what amendments need to be made to any previous forecasts. The author discusses top down and bottom up methods of estimation and then discusses objective estimates, subjective estimates, comparative estimates, synthetic estimates and parametric estimates