Significance of Cost Estimates

Cost estimating is a critical element in any acquisition process and helps decision-makers evaluate resource requirements at milestones and other important decision points. It is the basis for establishing and defending budgets and drives affordability analyses. Cost estimates are integral to determining and communicating a realistic view of likely cost and schedule outcomes that can be used to plan the work necessary to develop, produce, operate, maintain, and dispose of a program.

Cost estimating also provides valuable information to help determine whether a program is feasible, how it should be designed, and the resources needed to support it. Further, cost estimating is necessary for making program, technical, and schedule analyses and to support other processes such as:

• source selection,
• assessing technology changes,
• analyzing alternatives,
• performing design trade-offs, and
• satisfying statutory and oversight requirements.