Top-Down Probability-Based Cost Estimation

Knut Samset

Chapter 22 in Early Project Appraisal, 2010, pp 215-224 from Palgrave Macmillan

Abstract: Abstract Cost calculations normally are based on fixed cost estimates.1 A cost calculation may be a simple overview at a high aggregation level with only a few items.2 If so, the uncertainty of the result normally is considerable. A cost calculation also may be meticulously detailed. That reduces uncertainty. But for major projects, the computation often is exhaustive and expensive. It’s also extremely rigid in the sense that considerable revision may be required should fundamental assumptions be changed in the project concept. Hence, early on in the concept phase, detailed cost overviews often are counterproductive.

Keywords: Cost Estimate; Cost Calculation; Stochastic Estimation; Shopping Centre; Building Site (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28992-5_22

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DOI: 10.1057/9780230289925_22

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