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=Challenges in Cost Estimation Management and Areas for Improvement=

There are many things that could be done better to make estimation more effective in cost management, but there are many challenges and weaknesses that need to be addressed to make current cost estimation techniques and methods more effective. Also, the understanding of the relationship between customer satisfaction and costs is critical to tracing the origins of customer-level profitability as the need for businesses to become more customer-centric increases. The aforementioned factors and techniques are mainly related to management tools, and little attention has been paid to human communication, either that means communication with the customer or communication of the associated members. Cost modeling still has room for improvement in terms of accuracy and joint cost modeling. In the challenges that will be mentioned below, the complexity, the amount of information, uncertainty, predetermination, human factors, and the other factors play an important role.


Olav Torp and Ole Jonny Klakegg in their article referring to their article Johansen et al. [7] and using as a case study of the Decommissioning of Barsebäck Nuclear Power Plant, addresses in their discussion the following challenges. Those challenges related to project cost estimation and the measures to solve present issues by enhancing the cost estimation and uncertainty analysis process especially for complicated projects in order managers may be able to estimate the appropriate level of expected costs for each project. The following is a list and explanation of those five challenges: 


* The resource group is not well composed
* Too much details in the cost estimation models
* There is no focus on opportunities
* The level of uncertainty is underestimated in all phases and
* The expected cost is underestimated


The challenge of composing the group with the ideal combination of subject matter expertise and skill sets, to guarantee a diverse variety of viewpoints is very important. Instead of taking into account the appropriate mix of abilities and backgrounds, groups are frequently established based on the availability of specific persons. Despite the fact that their attention may be more narrowly focused on technical rather than more general issues, technical experts frequently receive priority. It is also significant to consider how project participants' desired attitudes about risk are impacted by situational factors including training, role, and accountability. The team gained a fundamental knowledge of the technique to be used, and the roles of various persons within the project were better understood by holding planning meetings and discussing the project's approach with the group members. Even while there may still be disparities in the group's attitudes about risk, these variations can be useful if they are successfully tapped.
Another challenge is the level of detail in cost estimation procedures and how it affects the project overview and uncertainty. The acceptable and practical amount of detail in considering the time and data at availability is questioned. Due to thorough planning and data modeling, the Barsebäck analysis' three-day workshop allowed for a thorough evaluation of cost items, uncertainty factors, and analysis findings. To talk about specific incidents and risk-reduction measures, though, would have taken too much time. The benefits of stepwise decomposition and reassessment of the cost items with the highest degree of uncertainty could not be fully reaped by the workshop. Although the cost breakdown structure is followed, there is less estimated uncertainty as the depth of information increases. The treatment of association between components, however, increases complexity. 
The challenge of identifying opportunities highlights the importance of openly addressing them while identifying uncertainty. If opportunities aren't asked to be found sufficiently, risks end up taking center stage. Despite the fact that risks and opportunities are two sides of the same coin, it is crucial to distinguish between them while discussing them to maintain a clear focus on both. As part of the brainstorming process for decommissioning Barsebäck, the group explicitly identified and investigated opportunities. Finding a solution for safe interim storage was one significant opportunity that was found. This could allow for earlier decommissioning, add value for the community, reduce costs by about 15%, and shorten the overall project duration, reducing contextual uncertainties. The group thought about two different future possibilities as a result of this opportunity. Although further planning is required to evaluate their viability, the group was able to discover major potential by correctly addressing opportunities.
The calculated level of uncertainty in uncertainty studies shows that the standard deviation frequently appears to be erroneously low in such analyses. The complexity, maturity, and length of time from the analysis to project completion are some of the variables that affect the level of uncertainty. The computed standard deviation for the Barsebäck project, which is in the planning and feasibility study stages, was higher than 20%. The level of uncertainty in Barsebäck was significantly higher when compared to a study of 100 Norwegian infrastructure projects, which produced a standard deviation between 6% and 12%. The right amount of ambiguity, though, is still up in the air. According to the article, consistently addressing uncertainties, communicating all uncertainty-related effects through input, and providing correlations between connected items all helped to achieve higher degrees of uncertainty. Additionally, the essay suggests selecting extreme estimates from various group members to use as input for triple estimations.
When it comes to underestimated cost levels, the majority of projects have cost escalations, with an average increase of 28%. Even if the cost estimation procedure and uncertainty analysis are of the highest caliber, we cannot predict if the Barsebäck example project will experience a cost escalation.[6]


Moreover, Jaakko Kujala et al. [8] at their article refer that over the years, numerous methodologies, standards, strategies, and tools have been developed to aid in the effective cost estimation of projects. However, large initiatives across a variety of industries, including IT, defense, financial services, and construction, continue to struggle with poor effectiveness and failure to produce the desired results. A better understanding of project complexity could help to better understand the relationship between practices and outcomes in project-based processes and that it is important to draw differences between various types of projects.

In their final discussion they quote that among the most crucial cost management tasks and subtasks related to the execution phase of complex projects are updating the project cost estimates, monitoring project costs, controlling project costs, calculating and releasing particular contingencies, calculating margins, and profitability analysis. The main challenges related to estimation cost in management in complex projects, which were characterized by the following attributes: '''large size, complexity, uncertainty and uniqueness'''. Conducting estimation costs in complex projects effectively creates new challenges in terms of the organizational structure, project management, and employee competency. In cost management, function faces unique challenges as projects become more complicated because many of the old cost estimation techniques are unable to handle the complex and unpredictable nature of today's large-scale projects. Additionally, estimating cost in complex projects offer individualized solutions to address the customer's problem, hence the final solution frequently diverges dramatically from those of earlier projects. The estimations are inaccurate because of a lack of experience with comparable projects and the limited accessibility of the previous data. Furthermore, the collaboration of numerous internal and external stakeholders is an important challenge for cost control in large projects. Managing and estimating supplier expenses becomes more challenging as the number of suppliers rises. Also, the uniqueness of a project always causes cost overruns and of course it is a great challenge. Finally, is quite challenging for cost calculation and the financial statements to provide the proper information for the reliable calculation of the project’s cost, and the percentage of completion of the project to be reliably quantified in the financial statement.[8]