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(CSC-4122) Major Project Execution Cost Forecasting - Back to Basics

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Level: Basic
TCM Section(s):
10.2. Forecasting
Venue: 2023 AACE International Conference & Expo

Abstract: The success of any project is assessed by how well its outcome achieves project objectives within budget and schedule to satisfy the stakeholder. The project team’s ability to reliably forecast the cost at any point in time is paramount to meeting the budget expectations. As a cost forecast, by definition, is the prediction of the final cost of the project based on status and trends, it includes both objective and subjective elements. Therefore, risk and uncertainty are central to any project cost forecasting, and usually there will be some variance between the final project actual and forecasts. The aim of the project team in the cost forecasting process is to minimize this variance as much as possible. However, due to the abundance of project controls software in the project management environment, there has been an overreliance on system generated cost forecasts rather than an in-depth analysis by project teams. The purpose of this paper is to examine some of the forecasting techniques that can be applied during project execution to produce a reliable projected final cost.