Budget preparation
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Yes absoltely Karim,
No doubt about that. It sounds similar to what I have said.
Cost estimates can benefit from refinement during the course of the project to reflect the additional detail available. Most of the companies, i have worked, there are guidelines for when such refinements are made and for what degree of accuracy is expected.
Hope we both are clear and ritesh too.
:-)
Raviraj
Raviraj,
IMO, Cost estimating is the process where u get an estimate for each activity.
Cost budgeting is the process of combing all these estimates in order to get a budget.
Therefore the cost estimating can be at the tender or construction phase, what differentiate between each phase and the other is the accuracy of estimates (which is directly related to the information & time available for preparing the estimates like the method of Bottom-Up estimating).
Regards,
Karim
Hi ritesh,
Cost estimating and cost budgeting are two different things:
Cost estimating is at the tender stage and basic purpose is to develop an approximation of teh cost of resources needed to complete project activities.
Whereas, cost estimating is actually aggregating the estimated costs of individual activities or work packages to establish a cost baseline. (post-award stage)
So, its straight forward, while cost estimating as you dont have enough time, you need to have top-to-bottom approach,
And in cost estimating, as you are aggregating the cost of individual activities, you need to have bottom-to-top approach.
Hope I am clear.
Cheers,
Raviraj A Bhedase
Also, it depends on the information, time available for you to estimate the budget.
For example, the Bottom-Up estimating (as it is the most accurate way to prepare the budget) requires that the project is well defined (in order to break the activities down to lower levels) and it usually takes a lot of time to estimate the budget.
Regards,
Karim
Ritesh,
It all depends on the level of detail required.
A small low risk project that is similar to one you have previously done would suit top down estimating, then again a large project containing work your company has never done before would benefit from a detailed bottom up estimate.
The method and level of detail in an estimate varies depending on the size and inherent risk of the project.
Also the level of detail in an estimate for a tender programme may differ from that in a contact program.
Oliver