# Cost Estimation ## Basic idea The act of predicting how much money, effort, time, and other resources a software project will consume. Always uncertain — useful because the estimate informs planning, prioritisation, and go/no-go decisions. ## Key formulas * Algorithmic model: $\text{Effort} = A \cdot \text{Size}^B \cdot M$ * PERT three-point: $E = (O + 4M + P)/6$ ## What determines cost estimation? * Effort * Hardware cost * Travel Expenses * Training costs * Communication cost and other cost factors ## What is software cost estimation? ### What is estimation? Is the process of finding an estimate or approximation, which is a value that can be used for some purpose even if input data may be incomplete, uncertain or unstable. ### What is software cost estimation? Estimation of how much money, effort, resources and time will take to build a specific software based system or product. ### Why is it important? * Known budget, better for planning * Software is very expensive to build, its reasonable to develop an estimation before you start creating the software. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://isubasinghe.gitbook.io/isithas-wiki/software_engineering/management/cost_estimation/cost_estimation.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.