The conference method estimates cost functions on the basis of analysis and opinions about costs and their drivers gathered from various departments of a company (purchasing, process engineering, manufacturing, employee relations, and so on). Some banks, for example, develop cost functions for their retail banking products (such as checking accounts, credit cards, and mortgages) based on consensus estimates obtained from various departments. The costs of software development projects are often based on the collective judgment of experts. At Elegant Rugs, management accountants gather opinions from supervisors and production engineers about how indirect manufacturing labor costs vary with machine-hours and direct manufacturing labor-hours.
The conference method encourages interdepartmental cooperation. The pooling of expert knowledge from different business functions of the value chain gives the conference method credibility. Cost functions and cost estimates can be developed quickly because the conference method uses opinions and does not require detailed analysis of data. As a result, the accuracy of the cost estimates depends on the care and skill of the people providing inputs.