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A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values. A problem with a cost overrun can be avoided with a credible, reliable, and accurate cost estimate. A cost ...
The most basic element of a cost estimate and therefore the cost database is the estimate line item or work item. [3] An example is "Concrete, 4000 psi (30 MPa)," which is the description of the item. In the cost database, an item is a row or record in a table (of items) and the description is a column or field for that record.
Cost estimation models are mathematical algorithms or parametric equations used to estimate the costs of a product or project. The results of the models are typically necessary to obtain approval to proceed, and are factored into business plans, budgets, and other financial planning and tracking mechanisms.
In project management (e.g., for engineering), accurate estimates are the basis of sound project planning.Many processes have been developed to aid engineers in making accurate estimates, such as
A Allocation of costs is the transfer of costs from one cost item to one or more other cost items. Allowance - a value in an estimate to cover the cost of known but not yet fully defined work. As-sold estimate - the estimate which matches the agreed items and price for the project scope. B Basis of estimate (BOE) - a document which describes the scope basis, pricing basis, methods ...
A cost estimator will typically use estimating software to estimate their bid price for a project, which will ultimately become part of a resulting construction contract. Some architects, engineers, construction managers, and others may also use cost estimating software to prepare cost estimates for purposes other than bidding such as budgeting ...
An estimate that turns out to be incorrect will be an overestimate if the estimate exceeds the actual result [3] and an underestimate if the estimate falls short of the actual result. [ 4 ] The confidence in an estimate is quantified as a confidence interval , the likelihood that the estimate is in a certain range.
Currently the term "effort estimate" is used to denote as different concepts such as most likely use of effort (modal value), the effort that corresponds to a probability of 50% of not exceeding (median), the planned effort, the budgeted effort or the effort used to propose a bid or price to the client.