Chapter 15: Step 12: Update the Estimate

Programs should be monitored continually for their cost effectiveness by comparing planned and actual performance against the approved program baseline. In addition, the cost estimate should be updated with actual costs so that it is always relevant and current. The continual updating of the cost estimate as the program matures not only results in a more accurate estimate, but also gives opportunities to incorporate lessons learned. Future estimates can benefit from the new knowledge. For example, cost or schedule variances resulting from incorrect assumptions should always be thoroughly documented so as not to repeat those mistakes on future estimates. Finally, actual cost, technical, and historical schedule data should be archived in a database for use in supporting new estimates.

Effective program and cost control requires ongoing revisions to the cost estimate, budget, and projected estimates at completion. Developing a cost estimate should not be a one-time event but, rather, a recurrent process. Most programs, especially those in development, do not remain static; they tend to change in the natural evolution of a program. Before changes are approved, however, they should be examined for their advantages and effects on the program cost. If changes are deemed worthy, they should be managed and controlled so that the cost estimate baseline continually represents the new reality.