This study explores the use of time estimates as cost drivers and their impact on the accuracy of cost systems. The study, conducted in 2023, is available as a downloadable resource.
The first part of the study looks at the level of aggregation in the cost system’s definition of activities. Understanding how activities are aggregated is crucial for accurate cost estimation and management.
The second part examines different task environments (job design) where tasks present themselves in a coherent or incoherent order. Task environments play a significant role in how time estimates are provided and used as cost drivers.
Part three looks at the notification that participants will need to provide time estimates after performing a set of activities. This section highlights the importance of timing in the estimation process and its impact on cost accuracy.
Finally, there is an investigation into whether providing time estimates in percentages versus in absolute time units (such as minutes) has any impact on resulting accuracy. The findings suggest that the format of time estimates can significantly influence the precision of cost calculations.