Abstract: Cost estimation plays an important role in new product development;the two limitations in current parametric cost estimation are pointed out.Namely,the reasons of cost forming can not be identified,fed back and controlled,and the price fluctuation of resources market is not adequately considered.According to the ideas from activity-based costing that "products consume activities and activities consume resources",a three dimensional cost estimation model including logic dimension,data dimension and time dimension is established. The use of house of quality(HoQ) to estimate main parameters is discussed.Finally,the Radical Based Function(RBF) neural network is adopted to establish the Activity Estimation Relationships(AER) and an example of AER is given.

Key words: parametric cost estimation, activity-based costing, activity estimation relationships, HoQ, RBF neural network