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4 Types of Cost Estimates

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A cost estimate is a forecast of costs for a program, project, strategy, plan or activity. The following are common types of cost estimate.


Basing a cost estimate on the historical costs incurred by similar initiatives. This is typically done when costs are routine and predictable such as a repair to equipment that is always breaking down.

Bottom Up

Bottom up cost estimates involve analysis to identify things that need to be purchased and tasks that need to be completed. Each task is then separately estimated by appropriate subject matter experts. For example, if a particular task requires an engineer, you'd have an engineer estimate that task. Bottom up estimates may include price quotations from suppliers.

Parametric Estimates

Estimates that are calculated based on parameters. For example, software development that is estimated based on the complexity of requirements using metrics such as story points.

Reference Class Forecasting

Creating or validating estimates based on a database of similar programs, projects or activities. For example, a construction project may look at the actual costs of comparable buildings constructed in the past five years to validate bottom-up estimates.
Overview: Cost Estimates
A forecast of costs for a program, project, strategy, plan or activity.
Related Concepts


This is the complete list of articles we have written about estimates.
Base Case
Basis Of Estimate
Budget Estimates
Cost Estimates
Parametric Estimate
Risk Estimates
Work Complexity
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A definition of cost escalation with an example.

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A definition of relevant cost with examples.

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The definition of cost competition with examples.

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The common types of estimates.

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An overview of reference class forecasting as an estimation technique.


Projections of costs, task completion times and resource needs for a project.

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An overview of estimating with story points including planning poker.

Parametric Estimate

A definition of parametric estimate with examples.

Basis Of Estimate

A definition of basis of estimate with examples.

Cost Analysis

The common types of cost analysis.

Budget Estimates

A definition of budget estimate with examples.

Level Of Effort

The definition of level of effort with examples.

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An overview of technical requirements with common examples.
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