Project Cost Estimator - A Parameter-Based Tool to Predict Product Realization Costs at a Very Early Stage

Due to steadily increased demand for customized products, as well as their enhanced complexity and shorter product lifecycles, companies in all industries require a reliable prediction of the expected product development costs from the very start of product realization. Incorrectly estimated project costs may lead to serious consequences in the course of a development project. For example, offers are most often based on such early cost estimations and consequently, a major safety margin has to be added, which may result in the refusal of an order. A too low estimation of the costs of aproduct development project, on the other hand, may result in a loss for the project.In this paper, a software tool is presented for the prediction of product development costs which offers the user the ability to create a more accurate prediction of project costs on the basis of a minimum of retrograde project information. By combining a parametric cost model and cost result with stochastic character, based on the Monte Carlo method, in one software system, it is possible to significantly improve projectcost estimations.