What is a project cost estimate?
The estimated cost of completing a project in a fixed time is called the project cost estimate. Architects & Engineers for industrial projects usually prepare the project cost estimate. This document is dynamic and is for review at all project stages.
Is a project cost estimate essential?
- Industrial projects are costly affairs. There are multiple stakeholders in an industrial project. The project cost estimate is a document that provides the stakeholders with how much funding is needed and when it is required.
- A project cost estimate helps make an informed decision on how much to invest in different activities.
- The estimate helps to prioritise activities in a project.
- A cost estimate is a tool for checking the project’s progress.
Points to take care of while preparing a project cost estimate
Architects & Engineers for industrial projects have to be very cautious while preparing the cost estimate. They must keep the project scope in mind while creating the cost estimate. While preparing the cost estimate, the architects must involve the project’s stakeholders. Use taxes consistently throughout the budget.
Why do projects overshoot the estimate?
It is a frequent occurrence for projects to overshoot the estimate. Only 36% of the projects stay on budget. Some of the reasons are:
- Underestimated project budget.
- Project costs that are not feasible. It is essential to create an accurate cost estimate from micro-level
- Scope change
- When the project stakeholders overlook the challenges in the project.
- Missed milestones are a common reason for overshooting the budget.
- An unpredicted increase in the price of construction materials also is a reason for overshooting the estimate.
- Unforeseen circumstances
What to do when a project goes over budget
When the project cost overshoots the estimate, none of the project stakeholders is happy. However, if there is a situation where the project overshoots the budgets, there are a few steps that the architects could take:
- The architects and engineers for industrial projects must inform the project’s stakeholders and provide a revised budget.
- Avoid other reasons that increase the budget.
- By prioritising work, deferring less priority work to a later stage or next phase, the project can stay within budget.
- Look for ways to offset the increased costs in other areas.
Architects and engineers, and project management consultants work together to see that the project is within budget. Additionally, timely deliverables of design consultants and flagging of issues that could increase the project cost by the PMC, avoid overshooting the budget.
