**What Is Cost Estimating?**

An **estimate **is a calculation of **quantities **of a **different item** of work and the expenses likely to incur during **project work**. The **sum cost** of all **quantities **of work gives the idea of the **total construction** cost or **estimated **cost of project **work**.

The **calculated cost** of a work is a **close approximation **of its **actual cost**.

The **accuracy **of the **estimated** **cost **depends on the **accuracy **of estimating method and the **visualization **of work by the **estimator**. A correct and **accurate estimate **is **essential **for any project to become **cost**–**effective**.

There are various **types of cost estimates** used in **project management** such as Preliminary **Cost Estimate**, **2. Plinth Area Cost Estimate**,** 3. Cube Rate Cost Estimate, 4. Approximate.**

**Underestimated **cost of the project results in many **revisions** during the **execution **of work. This is due to a **shortage **of **financial support **due to **underestimation**.

This may also result in the **delay **of the **project **and become a reason for **dispute **between **contractor **and **owner**.

On the other hand, if the **project cost **is overestimated, the **owner **or **builder **gets a **financial loss **because of more quantity of **material **receive on-site than **required**.

**Read More: Long Wall Short Wall Method | Estimation By Long Wall Short Wall Method**

**Purpose of Cost Estimation**

The **main purpose **of **estimation **is to give a reasonably **accurate idea **of the cost*.* The estimated **accurate cost **of the project is **necessary **to give the **owner** a **reasonably **accurate idea of the cost to help him **decide **whether the **works **have sufficient **finance** or need to **arrange **more **money**.

How many **projects **will cost him and what are the returns from it **after completion **of the **project**? In the case of **government work **or a project, the **estimate **is **required **to get **financial sanction**.

**Sometimes**, small **nonpriority work** is given on a **lump**–**sum basis**; in which case the **Estimator **must be in a position to know **exactly **how much **expenditure **he is **going** to **incur **on them

**1. Materials Estimating**

An **estimate **of material gives an idea about the **type** **of material** and the **quantity **to be required for the completion of the **project**. It will help in the **advance arrangement **of that **material **and make an **order**.

**2. Estimating Labor**

**Labor estimates** provide the quality and **quantity **of **manpower **required during project work. **Sufficient **and skilled labor is **essential **to complete the **project **within given **time limits**.

** 3. Estimating Plant**

An **estimate **will help in **determining **the different **types of** **equipment **and plant **required** for the **completion **of the **project**.

### **4. Estimating Time**

The **estimation **of the **quantity **of item work helps in **deciding **the time of **completion **of the **project**. Also, the **accurate estimation **of project duration is important.

It is a **fact **that as our time of **completion increases **the cost of the **project **also increases with that, so **making **an accurate **estimate **of project duration is **essential**.

**Types of Cost Estimates**

**The following are different types of cost estimation,**

**1. Preliminary Cost Estimate**

The **preliminary cost estimate** is also known as an **approximate **cost estimate, abstract cost **estimate**, or **budget estimate**.

It is **generally prepared **in the **preliminary** phase of project planning to **know** the **approximate **cost of the **project**.

By this **estimate**, the project **authority** can judge the **financial position** and policy for the **administration section**.

The **preliminary cost **of the project is **calculated **from the cost of **similar** type projects **practically**. In this **estimate**, the cost of an **important **item of work is **calculated **individually to know the **necessity **and utility of each item of work.

In this **estimate important **item of work includes the **cost of lands**, cost of roads, **electrification**, water supply costs, cost of each **building**, etc.

**2. Plinth Area Cost Estimate**

The **plinth area **estimate is prepared by **considering **the cost per **plinth area **of a similar type of **construction **in the **locality**.

It is an area **covered **by external **dimensions **of the building at the **floor level **and **plinth** **area **rate of the building which is the **cost **of **a similar **building with **specifications **in that **locality**.

The **plinth area **estimate of the **proposed** **building** is prepared by **multiplying** the plinth area of the **building **with the **plinth** **area **rate.

For **example**, if the plinth area of the **proposed **building is about **100 sq.m** in a particular **locality **and the **plinth area **rate of a building in the same locality is **2000 per sq.m **then,

The cost of the **building** by plinth area **estimate **is **100 X 2000 = 200000.**

The **open** **areas**, **courtyards**, etc. are should not be **included** in the plinth area. For multi-storied **construction cost **of each floor must be **calculated separately**.

**3. Cube Rate Cost Estimate**

The **cubical content** of the building is **obtained **by **multiplying **the plinth area with the height of the **building**. The height of the building is **considered **from floor level to the top of the **roof level**. This method is more **appropriate **for **high-rise buildings.**

The **cube rate** cost estimate method is **more accurate **than the plinth **area **estimate. The **cubical rate **of construction is **obtained **by dividing the **total construction cost **by its cubical **content**.

The **cost **of the **proposed **project is **calculated **by **multiplying **the cubic rate of similar types of **buildings situated **in that location by the **cubic content **of **future work**.

**Suppose**, the cubic rate in an area is** Rs. 5000 / m3 **and the area of the **proposed construction** is **1000m3**

**Approximate cost of construction = 5000 x 1000 = Rs. 50, 00,000**

**4. Approximate Quantity Method Cost Estimate**

In this **method **of an estimate, the Total length of the wall of the **whole construction **is **calculated **and this length is **multiplied **by the rate per **running meter **which gives the **cost **of the **building**.

For the **foundation **and **superstructure **rate per running, the **meter **is calculated **separately**.

For **cost estimation **of foundation rate per **running**, the meter is **calculated **by considering **quantities **such as **excavation cost**, and **brickwork** **cost **up to the **plinth**.

The **superstructure quantities **like brickwork for the **wall**, **woodwork**, floor **finishing**, etc. are considered for **deciding **the rate per **running meter**.

**5. Detailed Cost Estimate**

A **detailed estimate **is prepared after the approval of a **preliminary estimate **competent **administrative authority**.

In this **estimate**, each item of work is **measured** **accurately **and the cost is calculated **separately**. It is the most accurate **estimate **among the other **method of estimation.**

The **cost **of an item of work is **calculated **from **current market **rates and the **total estimated cost** is **calculated**.

For **miscellaneous expenditure**, the contingencies amount to **3 to 5 % **of the estimated cost is **added **to the total **estimated cost**.

A **detailed estimate** is a major estimate **required** to get a **final **financial **sanction **from the competent **authority**.

**The detailed estimate should include the following details and documents.**

**Report**

**General Specifications****Detailed Specifications****Drawings/plans â€“ layout plans, elevation, sectional views, detailed drawings, etc.****Designs and calculations â€“ In the case of buildings design of foundations, beams, slabs, etc.**

**6. Revised Cost Estimate**

The **revised estimate **is prepared when the **original sanctioned **cost of the project is exceeded by **5% or more**.

It **detailed estimate **but improper **estimating **or **underestimating** the cost of the project **needs **to be **revised**.

The **reason **behind **preparing** a revised estimate may **sudden increase **in the cost of **materials**, cost of **transportation**, etc. the major reason behind the **preparation **of this **estimate **should be mentioned on the last **page **of the revised **estimate**.

**7. Supplementary Cost Estimate**

The **supplementary cost **estimate is a **supplement** to a detailed **estimate **and it is prepared **freshly **when there is a **requirement **for **additional **work** **during the progress of the **original work**.

After **approval **of the **supplementary estimate**, the total **estimated cost **should include a **detailed estimate **cost as well as the **cost of supplementary **work for which sanction is **required**.

**8. Annual Repair Cost Estimate**

The **annual repair** **cost **estimate is known as the **annual maintenance **estimate which is **prepared **to know the costs of **maintenance **of the building that will **keep **the structure in a **safe condition**.

It **includes **the cost of **whitewashing**, painting, minor **repairs**, etc. are **considered **while **preparing **an annual repair **estimate **for a **building**.

## Project Cost Estimation Example

**The project cost estimation excel sheet free downloads,**

## FAQs:

### Which are the type of Cost Estimation Techniques?

**The following methods are used for cost estimation,**1. Preliminary Cost Estimate

2. Plinth Area Cost Estimate

3. Cube Rate Cost Estimate

4. Approximate Quantity Method Cost Estimate

5. Detailed Cost Estimate

6. Revised Cost Estimate

7. Supplementary Cost Estimate

8. Annual Repair Cost Estimate

**What do you mean by Revised Cost Estimate**?

The **revised estimate **is prepared when the **original sanctioned **cost of the project is exceeded by **5% or more**.

**What Is Cost Estimating?**

An **estimate **is a calculation of **quantities **of a **different item** of work and the expenses likely to incur during **project work**. The **sum cost** of all **quantities **of work gives the idea of the **total construction** cost or **estimated **cost of project **work**.

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