Question 5

Reference class forecasting is applied at the Koda Engineering organization. A complicated road tunnel project is under consideration and enters the last decision phase prior to introducing the project to investors. The team estimating the project cost presents the estimated cost of 200 m euros. The board of directors at Koda now investigates the reference class for similar projects and discover that the empirical data indicate average cost overrun of 25%. When presenting the projected cost to the investors cost what cost estimate number should they present?