Cost estimates require context for proper decision-making. A cost estimate must include technical, programmatic, and other contextual information to offer value and meaning. This is contextual completeness. In this video, learn how to contextualize cost information and how to deliver contextual value for the cost estimate.
- What if I said to you, "Here's 500"? … What crosses your mind? … Am I giving you $500? … Did you get 500 points? … Or is it some cryptic code you don't get? … In every situation, context matters, … but even more so when properly estimating costs. … Whenever you conduct an estimate, … there must be additional technical, programmatic, … and other contextual information … with the numbers to give value and meaning, … we call this contextual completeness. … The best way to appreciate contextual completeness … is to use examples. … Okay, so let's say in March, 2011, … I purchased a 2010 Ford F-150 Crew Cab 4x4 pickup truck … with 40/60 split leather seats, … optional power and tow package, … and a heavy duty automatic transmission for $23,000. … This explicit example provides the cost for a specific model … of truck, the quantity, and contextual information … identifying the truck model and accessories. … So if you decide to purchase another truck, … you have sufficient information … to evaluate cost differences. …
- Describe the limitations in reaching 100 percent accuracy in cost estimates.
- Differentiate between nominal, ratio, and ordinal data.
- Relate the reason for credible cost estimates to a company’s business needs.
- Determine situations in which a business would use the top-down estimating approach.
- Examine the validity of data and data collection given a scenario.
- Explore the differences between cost, value, and performance.