• Senior decision-makers should ensure that they understand the underlying bases of estimates, and where areas of risk and uncertainty lie.
• An estimate produced from early high-level information is unlikely to be suitable for setting a programme budget and schedule. Any early estimate of programme cost and schedule should be seen as provisional, should clearly recognise limitations and uncertainties, and be used only in an indicative fashion to guide long-term planning until a detailed design supported by industry pricing is available.
• Previous practice in government has been to publish cost and schedule estimates as single point figures, and it is now moving to the use of ranges to better reflect risks and uncertainties. While we welcome this development, decision-makers must understand what these ranges represent and how much confidence they can put in them. Bodies should work to understand what risks and scenarios might cause the programme to exceed these ranges, and revisit this analysis as the programme progresses.
Please also refer to our Survival Guide to challenging costs in major projects5 which explores cost estimating further.
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5 Available at: www.nao.org.uk/report/survival-guide-to-challenging-costs-in-major-projects-2/