Understanding Project Cost Estimates

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Understanding Project Cost Estimates
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What is a Project Cost Estimate?
Definition The estimated cost of completing a
project in a fixed time. Preparation Typically
done by Architects Engineers for industrial
projects. Dynamic Document Subject to review at
all project stages.
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Importance of Project Cost Estimates
Funding Guidance Provides stakeholders with
funding requirements and timing. Informed
Decision-Making Helps in deciding investment
priorities. Activity Prioritization Assists in
prioritizing project activities. Progress
Monitoring Serves as a tool for tracking
project progress.
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Points to Consider During Preparation
Scope Alignment Ensure the cost estimate aligns
with the project scope. Stakeholder Involvement
Involve project stakeholders during
estimation. Consistent Tax Usage Use taxes
consistently throughout the budget.
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Why Projects Overshoot Estimates
Underestimated Budgets Infeasible Cost
Estimates Scope Changes
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Overlooking Project Challenges Missed Milestones
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Price Increases in Construction Unforeseen
Circumstances
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Materials
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Managing Budget Overruns
Inform Stakeholders communicate with
stakeholders and provide a revised
budget. Mitigation Strategies Avoid additional
budget-increasing factors. Prioritize Work
Focus on essential tasks and defer less critical
work. Cost Offset Look for opportunities to
offset increased costs elsewhere. Collaboration
Architects, engineers, and project management
consultants collaborate to ensure budget
adherence and timely deliverables.
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