1. Cost estimation issues

1.1 Context

Today, there are three different approaches to cost estimation, depending on the type of decision to be made. Indeed, the main concern of the management in charge of defining the company's strategy is the "margin" or profit achievable on a given project. It is vital for all companies to make a profit if they are to continue to exist. As for the salesperson, whose aim is to position his or her product as effectively as possible in relation to the competition, he or she seeks the optimum selling price, i.e. the market price. The sales price and the margin then form a set defining the economic constraints of the project, imposing a maximum manufacturing cost price (MCCP). Today, project cost has become as much a design parameter as technical specifications.