Post 452 -by Gautam Shah
Estimates are required at different stages of a project, and to serve varied purposes. The basis and the format in each case are completely different. The estimates are monetary as well as non-monetary. A project originates on the strength of Land, Money, Market accessibility, Technical expertise or sheer Interest and will-power. A project initiator or client needs to know, or be made aware of, how such potential can be exploited.
The first estimate exercise defines the absolute scope of the project. Very often such reports are prepared by non-designer consultants. Such estimates, largely non-monetary evaluations, are integral part of a project report. It defines a project in terms of its scale, scope, extent and other physical para-metrics. A project is compared to similar entities elsewhere. The estimate evaluates the land, investment, human and other resources required for the project. It also indicates the structure of the entity and time schedules, as to who-how it can be owned, executed, operated and managed. For a realistic monetary evaluation design details are required.
Next estimate exercise occurs with the preparation of design brief. A design brief is based on area or volume of the project structure, plant-equipment capacities, etc. The monetary costs, if any are presumptive, as no detailed cost-analysis is done, drawn from current-day market conditions. The estimate exercises determine the probable budget for the project. The probable budget helps in search of alternatives. Budgetary estimates are usually made by the people involved in the design and familiar with execution of projects. Such estimates help in feasibility check up, primary budgeting, funds planning, in fixing extent of a job, and stages of strategic and tactical actions.
The next major estimation work is a cumulative exercise. Once the design has been framed, and perceived in terms of various jobs, consultants are defined. The consultants are provided performance requirements and asked to present their budget. On a complex site usually there are many such segmented estimates, and these need to be compiled together with additional costs required for the concurrent operations of all jobs or subsystems. These facilitate planning of resources, search of options, check quotations, control on costs, and determine the cost of professional services.
Pre-execution estimates are all presumptive. Such estimates remain variable, because for every change in parameters like, the market cost of input materials, labour, etc. the estimates need revision. The fluidity lasts till the quotations are executed. The estimates here onwards are commercial commitments for delivery. The estimates include cost of guarantees and warranties. As these are mostly linked to specified quantities and conditions, downward revision may not be permissible. For any later day change in specifications, the estimate, however, may go upward.
Tender or Contract award estimates are very exact, requiring equally perfect drawings, details and specifications. These estimates are used to verify bills for work. The structure of such estimates is controlled by factors, such as: nature of an item, schedules and sequences of execution, contract system, supervision system and agency, modules of measurements, modes of measurements, mode of billing and mode of payment.
A client may be exposed to selective sections of such evaluation exercises, to increase the awareness of the design process, to solicit additional information, and get approval of certain design decisions.
Post execution estimates are created to determine the total cost of project, taxes, amount fees to be paid to consultants and final cost certification (required for assigning services like security, maintenance and insurance). As the item is born, the post execution estimate becomes static (non changing) document, a historic estimate. Historic estimates conclusively state, the absolute value addition to the wealth, investigate conditions that caused cost over or under runs and to determine the set-off or depreciation amounts. Historic estimates, are usually carried out by third parties, or people not necessarily involved with design or execution processes.