Estimation

== Uses of estimation ==
In mathematics, [[approximation]] describes the process of finding estimates in the form of upper or lower bounds for a quantity that cannot readily be evaluated precisely, and [[approximation theory]] deals with finding simpler functions that are close to some complicated function and that can provide useful estimates. In statistics, an [[estimator]] is the formal name for the rule by which an estimate is calculated from data, and [[estimation theory]] deals with finding estimates with good properties. This process is used in [[signal processing]], for approximating an unobserved signal on the basis of an observed signal containing noise. For estimation of yet-to-be observed quantities, [[forecasting]] and [[prediction]] are applied. A [[Fermi problem]], in physics, is one concerning estimation in problems that typically involve making justified guesses about quantities that seem impossible to compute given limited available information.

Estimation is important in business and economics because too many variables exist to figure out how large-scale activities will develop. [[Estimation (project management)|Estimation in project planning]] can be particularly significant, because plans for the distribution of labor and purchases of raw materials must be made, despite the inability to know every possible problem that may come up. A certain amount of resources will be available for carrying out a particular project, making it important to obtain or generate a [[cost estimate]] as one of the vital elements of entering into the project.<ref>''A Guide to the Project Management Body of Knowledge (PMBOK Guide) Third Edition, An American National Standard, ANSI/PMI 99-001-2004'', Project Management Institute, Inc, 2004, {{ISBN|1-930699-45-X}}.</ref> The [[U.S. Government Accountability Office]] defines a cost estimate as, "the summation of individual cost elements, using established methods and valid data, to estimate the future costs of a program, based on what is known today", and reports that "realistic cost estimating was imperative when making wise decisions in acquiring new systems".<ref>''GAO Cost Estimating and Assessment Guide, Best Practices for Developing and Managing Capital Program Costs, GAO-09-3SP'', United States Government Accountabity Office, March 2009, Preface p. i.</ref> Furthermore, project plans must not underestimate the needs of the project, which can result in delays while unmet needs are fulfilled, nor must they greatly overestimate the needs of the project, or else the unneeded resources may go to waste.

An informal estimate when little information is available is called a [[guesstimate]] because the inquiry becomes closer to purely guessing the answer. The [[estimated sign|"estimated" sign]], ℮, is used to designate that package contents are close to the nominal contents.