A fair estimate, yes. Some games take longer than that. Don't expect the eight wonder of the gaming world with a development cycle less than that. 
  
 
Without knowing the specifics of the contract, there is only guesswork. Possible models are a fixed fee, split and paid for each milestone in the process (the publisher takes the risk and the profit). A fixed fee as before, but slightly less, compensated by a royalty per unit sold (the publisher takes a slightly smaller risk, but has to share some of the profit). 
  
Other models might apply, thought I doubt Lucasarts or Obsidian is going to show the content of their contract to the forum