Chapter 4: Step 1: Define the Estimate’s Purpose

The purpose of a cost estimate is determined by its intended use, which determines its scope and detail. Cost estimates have two general purposes: (1) to help managers evaluate affordability and performance against plans, as well as the selection of alternative systems and solutions, and (2) to support the budget process by providing estimates of the funding required to efficiently execute a program. More specific applications for cost estimates include providing data for trade studies, independent reviews, and baseline changes.