When creating plans and the industry infrastructure design at the beginning of a project, there is usually insufficient information to prepare a cost estimation accurately. Additionally, project schedules and cost estimations are very complex activities. Industrial design consultants and architects have to have multiple sessions to prepare schedules and cost estimates.
A little inaccuracy sometimes saves tons of explanation. – Saki
How much will this project cost? Are we on a budget? These are the most frequently asked questions during a project review. Being on a budget is achieved by two steps, the first being Cost Targeting and the second being Cost Controlling.
Cost targeting
During the earlier phase of project discussions between the industrial design consultants and architects and the client, they fix a reasonable cost expectation in the form of a budget along with the functional requirements of the project.
During the detailing of the project, they continuously monitor, review and adjust the key components to fall within the budget. At the same time, they ensure that they never compromise the project quality and does not disturb the distinctive size and form of the project
Cost estimation
The industrial consultants and architects prepare the project cost estimate and budget in the initial stage of the project. But they make the refinement of the same at various stages of industry infrastructure design and detailing. However, there are no hard and fast rules to decide on the number of steps that they can follow for the preparation and refinement of the cost estimate of a project. But most plans shall have the following minimum 4 steps of estimate development and refinement.
At each stage of estimation, the details of the projected increase with a correspondent increase in the accuracy of the estimate and a decrease in contingencies. Also, the industrial design consultants submit a variance report along with the forecast. It clearly shows the changes and the reasons from previous estimates. In all estimates starting from the first estimate to the final, the total expected construction costs would reflect
“First, have a definite, clear, practical ideal; a goal, an objective. Second, have the necessary means to achieve your ends; wisdom, money, materials, and methods. Third, adjust all your means to that end.” ~ Aristotle
Class ‘D’ estimate
This is the first-ever estimate for a project and it characterizes an accuracy level of ± 30%. The cost assessment is based on initial information regarding functional requirements, the comparative cost of similar projects already completed, etc.
Class ‘C’ estimate
Industrial design consultants prepare this estimate after the conceptualization of the project. It characterizes an accuracy of ±20%. This is still a rough estimate of the project based on the agreed functional requirements, size, and form of the project.
Class ‘B’ estimate
This estimate characterizes an accuracy level of ± 10%. They prepare this estimate after the completion of the schematic design phase. The detailed industry infrastructure design has progressed to a sufficient stage to estimate the breakup costs of various components of the project.
Class ‘A’ estimate
This becomes the most accurate estimate of a project cost and characterizes an accuracy of 5%. This cost estimation is prepared by the project consultants and architects after a detailed engineering process for the industrial infrastructure design is completed, and complete details of the project are available before the tendering process.
