Cost estimation is an important process in the complex designing and building of a project. It estimates variables that affect the construction, including proper study, past experience and market research.
A professional valuation firm or a construction estimation software can help the design team or property owner make accurate estimates of the construction cost, especially for big projects. Similar construction projects done in the same timeframe or season would also be a good reference, as the materials and prices would most likely be the same.
It is important that the estimator discern the project needs, to come up with the right allocation or budget. The budget should also meet the specified development design and construction detail. Although estimates are typically concerned with initial costing, the drill also plays a big role in looking at the project from different vantage points, to find design alternatives or anticipate future problems.
Construction material costs include shipping charges and taxes. Accurate cost forecasts affect the success of the operation. The cost magnitude depends on the nature, size and location of the project. These factors are the main considerations in building design, but other aspects are equally significant.
Land acquisition cost, for instance, influences expenditure in dense urban areas. An article about project management cites that some relatively smaller projects in dense locations can go as high as the cost of building nuclear power plants.
Allowance for Contingencies
Most construction budgets make allowances for unexpected expenses. This way, the project team could prepare for contingencies, if they expect the project to be more difficult or if past experience dictates the move. These contingency amounts may be classified as one item or grouped under a single component of the contingency.
The most common situations that need a contingency fund are design development changes, schedule adjustments, general administration changes, changing site conditions, and third-party requirements.
Cost estimation is one of the most important steps in project management. It establishes a cost at different phases of the project development and covers potential problems or future issues.