Likewise, project cost estimates are not to be artificially raised beyond the contingency percentages necessary for the project unless the increase is adequately justified. Project cost estimates are never to be artificially reduced to stay within the funding limits, nor they are to be reduced for the purpose of making the funds available for the project. The ‘project cost estimate’, as used during the project development process, includes all capital outlay costs, including right-of-way, structures and landscaping. Unreliable cost estimates can also lead to staffing and budgeting decisions which can result into incorrect and inefficient use of the available resources. Unreliable cost estimates cause significant problems during the project implementation. Reliable cost estimates are necessary for responsible financial management at every stage of the project.
Cost increases over and above project budget are a constant concern of the stakeholders and the senior management. Hence, cost estimates are to reflect an overall accuracy which is indicative of the level of information available at the time the estimates are being developed. Quality cost estimates are also necessary in maintaining stakeholders’ confidence and trust throughout the life of the project. The basic requirements of the project cost estimates are that these estimates are to be prepared on an ‘unlikely to be exceeded but not excessively conservative’ basis for various stages of the project life cycle to provide confidence in project priority, affordability and strategic fit.Īn accurate estimate goes a long way toward supporting a successful project. ADC, civil work, Consent and approvals, contingency, Design and engineering, IDC, Plant and equipment, Project, roads, structural ,Įstimation of the project cost for a green field steel project is essential for ensuring that the available resources for the project are used effectively and wisely.Estimation of Project Cost for a Green Field Steel Project
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