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Developing reliable cost estimates is crucial for realistic program planning, budgeting and management. While some agency guidelines on cost estimating are thorough, other agency guidance is limited regarding processes, procedures, and practices for ensuring reliable cost estimates. The Cost Guide is intended to address that gap. Its purpose is twofold - to address generally accepted best practices for ensuring reliable cost estimates (applicable across government and industry) and to provide a detailed link between cost estimating and earned value management (EVM). Providing that link is especially critical, because it demonstrates how both elements are necessary for setting realistic baselines and managing risk. As a result, government managers and auditors can use the best practices in the Cost Guide to assist them as they assess (1) the reliability of a program's cost estimate for budget and decision-making purposes, and (2) the program's status using EVM.

The Cost Guide outlines key steps in the cost estimating process: the purpose, scope, and schedule of a cost estimate; a technical baseline description3; a work breakdown structure (WBS); ground rules and assumptions; data collection; estimating methodologies; sensitivity and risk analysis; documenting and presenting results; and updating estimates with actual costs. The Guide also includes information on EVM; the composition of a competent cost estimating team; software cost estimating; and best practices for an analysis of alternatives. Additionally, the Guide addresses auditing and validating cost estimates. The Guide discusses pitfalls associated with cost estimating and EVM that can lead government agencies to accept unrealistic budget requests - such as when risks are unaccounted for in an otherwise logical approach to estimating costs.