PRICING MODELS USING COST, RISK, & OPPORTUNITY

Sometimes, modeling tasks are used not for scheduling purposes but for costing purposes. For instance, in developing a government bid, a corporation may be required to submit a cost estimate and a bid based on the cost estimation model. Developing an incorrect cost estimate may result in losing the bid (overbidding with an incorrectly inflated cost) or obtaining the bid and losing money (under-costing and, hence, under-bidding on a firm fixed price project).

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