Cost forecast

What is a cost estimate?

A cost forecast refers to the forward-looking estimation of a project’s total costs up to the point of completion. It identifies the financial resources that are expected to be required to successfully complete a construction or real estate project. The cost forecast is based on actual costs already incurred, outstanding commitments (contract values), future services, and potential risks. It is therefore one of the most important management tools in project controlling and cost planning in the construction industry.

The Importance of Cost Forecasting in Project and Real Estate Management

Cost forecasting plays a central role because it provides transparency regarding the financial progress of a construction project. It enables:

• Early detection of deviations and cost increases: Forecasts identify cost trends before budget overruns occur.
• Informed decisions and cost control: Project participants and clients can identify measures to contain or reallocate costs.
• Security for investors, banks, and developers: A reliable forecast is the foundation for financing and lending decisions, as well as for the project’s financial viability.
• Cash flow planning and management: The forecast supports liquidity planning through to completion.
• Portfolio comparisons and management of multiple properties: Forecasts make projects comparable and help guide investment decisions.

As such, cost forecasting serves as an essential foundation for successful cost planning, cost estimation, and cost control in the construction and real estate industries.

Components of a cost forecast

A cost estimate typically consists of the following elements:

1. Actual costs

Costs that have already been incurred and settled, which serve as the basis for the forecast.

2. Commitments (Contract Values)

Costs that have already been determined by signed contracts and are treated as target costs throughout the project.

3. Outstanding costs (remaining costs)

Estimated costs for services that have yet to be awarded or performed, including any potential additional work.

4. Risks and Opportunities

Assessed cost risks or potential cost savings that are factored into the forecast and affect the accuracy of the cost estimate.

5. Total cost upon completion

Final result of the forecast: the expected project costs at completion, also referred to as the budget or current cost estimate.

Cost Forecasting in the Construction and Real Estate Industry

In practice, cost forecasting helps maintain a realistic overview of the final financial outcome of a construction project at all times. Examples:

• In the event of cost increases: Rising material prices, construction delays, or changes to the plans can affect future construction costs.
• For contracts: Services that have not yet been contracted must be estimated and included in the forecast.
• When evaluating portfolios: Cost projections are essential for investors and developers who are assessing the financial performance of multiple projects simultaneously.

Related terms

• Budget Forecast
• Project costs
• Cost accrual
• Forecast
• Project controlling

Cost Forecast in PROBIS

PROBIS offers a powerful forecasting module that provides precise support for calculating costs through to completion. Features include:

• Automatic Forecasting: PROBIS automatically combines actual costs, order values, and remaining costs.
• Multidimensional analysis: Forecasts can be analyzed by cost group, order, component, or item.
• Risk management integration: Risks and opportunities are directly incorporated into the forecast.
• Real-time updates: Any change to the budget, allocation, or performance immediately updates the forecast.
• Portfolio capability: Forecasts for individual projects or n projects can be displayed side by side.
• Transparent reports: Cost forecasts can be exported as clear, easy-to-read reports and shared with banks or investors.

In this way, PROBIS enables precise and dynamic forecasting, which provides both planning reliability and transparency.

Conclusion: What is a cost estimate?

A cost forecast is a forward-looking estimate of all costs up to the completion of a project. It combines costs already incurred, commitments, remaining work, and risks into a realistic total figure. PROBIS supports this process with automated, transparent, and always up-to-date forecasting functions—enabling efficient project management, cost control, and a reliable basis for decision-making.