Parametric Cost Modelling for Innovative Technology Projects

Introduction

For the successful delivery of innovative technology projects, accurate cost estimation and effective cost management are paramount. Common Agile cost estimation methods are sometimes not well understood and can struggle to keep pace with the evolving nature of Agile projects. Traditional Waterfall or ground-up budgeting is cumbersome and inflexible to decision-makers’ needs for reliable updates to financial outlooks in near real-time. Parametric cost modelling offers a useful foil to these complexities by leveraging historical data and statistical relationships to generate more accurate and objective cost forecasts.

This research paper explores the benefits of parametric cost modelling in innovative technology projects, particularly those using Agile methods. It provides a guide for implementing parametric cost modelling, including practical considerations for data collection, model building, and stakeholder communication. The paper also addresses the challenges and limitations of parametric cost modelling, offering strategies for successful integration with Agile practices.