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Last edited 03 Feb 2023
The term ‘estimate’ is a very broad one that refers to any activity that attempts to quantify something. In the construction industry, it is typically used in relation to the approximate costs associated with a construction project, used, for example to assess the viability or affordability of the project or aspects of it.
An estimate is an attempt to predict the likely expenditures associated with a project as accurately as possible. The degree of detail and the accuracy of estimates will typically increase as the project progresses, more decisions have been made, and more information is available, however, their true accuracy only becomes apparent once the project is complete and the actual costs incurred.
- Benchmarking, which is a process by which other similar projects are used as comparisons.
- Breaking down an overall estimated construction cost into percentages for different elements, based on the experience of the cost consultant.
- Measuring defined quantities from drawings.
Initial cost estimates might include wider project costs that the client might incur, such as; fees, equipment costs, furniture, the cost of moving staff, contracts outside of the main works, and so on. Later in the project, estimates are likely to focus on the construction cost of the project. It is important to be clear therefore what costs are being included in estimates, and estimates might be accompanied by a schedule of the assumptions that have been made.
Estimates will generally include contingencies, which are downside risk estimates that make allowance for unknown risks associated with a project. At the preliminary business plan stage, estimates might include a 15% contingency, but this may then be reduced as the project progresses and risks pass.
NB Cost prediction, Professional Statement, 1st edition, published in November 2020 by the Royal Institution of Chartered Surveyors (RICS), defines estimate as: A prediction or forecast of the resources (i.e. time, cost, materials, etc.) required to achieve or obtain an agreed scope of work (i.e. for an investment, activity, project, etc.).’
- Analogous estimating.
- Base cost estimate.
- Bottom-up estimation.
- Building works estimate.
- Cash flow projection.
- Common mistakes in bill of quantities.
- Cost overruns.
- Cost plan
- Cost plans.
- Elemental estimating.
- Elemental method.
- Expert opinion estimating.
- Extra over (EO).
- Initial cost appraisal.
- Irrelevant cost.
- Operational rate estimate?.
- Order of cost estimating.
- Parametric estimating.
- Post tender estimate.
- Pre-tender estimate.
- Spon's Price Book.
- Tender pricing document.
- Three point estimation.
- Top down estimating.
- Types of estimating.
- Unit rate estimating.
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