Review objectives by Richard Slingerland:

Cost estimates typically represent a complex compilation and analysis of input from many project stakeholders. To ensure the quality of an estimate, budget or bid, a review process is required to ensure that the estimate meets project and organization requirements. The project plan typically requires that the cost estimate:

• Reflect the project strategy, objectives, scope and risks

• Be suitable for a given purpose (e.g., decision making, control, bidding, etc.)

• Address the stakeholders’ financial and performance requirements

• Ensure that all parties agree on and understand the estimate’s basis, content and outcome,

• Including the estimate’s probabilistic characteristics (e.g., range, cost distribution, etc.).

The estimate review is typically quantitative in nature and focused on ensuring that the estimate meets the project expectations and requirements in regards to its appropriateness, competitiveness, and identifying improvement opportunities. The estimate is typically benchmarked against or compared to various cost metrics and/or cost targets, including third party published data from the public domain, similar completed projects from company’s historical data, or past detailed estimates.

The goal of the estimate review is to ensure that key metrics from the estimate are in line with the same metrics from similar projects. It can be considered a top-down view of the estimate that provides a unique, objective perspective. If there is a large discrepancy, it must be explainable. The metrics may include summary measures such as engineering/total project costs as well as detailed measures such as hours/quantity by discipline. Another basis of estimate validation is to prepare a check estimate, usually using more conceptual estimating methods. Again, any significant discrepancies between the estimates should be explained. According to AACE, project are often underestimated, especially during the early stages of the project:

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