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Corporate goals

Regardless of the size and scope of your project, standardized cost estimating will help produce accurate estimates. That said, the industry, sector, and type of project can have a bearing on how you develop your estimates. Therefore, it’s worth examining how cost estimating is done in some key industries and more complex use cases.

Construction

Construction costs span two major cost categories: those incurred in the actual construction and development of a facility and those incurred in the operations and maintenance of the facility throughout its life cycle.

The first category includes things like the cost of land, labor, equipment, and materials needed to build a facility, the cost of architectural design and engineering, and the cost of facility inspection. The second category includes maintenance and repair costs, land rent and utilities costs, and the cost of operations and employing operations staff.

One factor that looms large in cost estimation for construction projects is the need for contingencies. Since construction projects are typically large-scale and performed over extended periods of time, adequate contingency planning is vital. Contingencies in construction projects include:

  • Schedule adjustments, which are not unusual for such large-scale projects. Given the large costs of equipment and labor in construction projects, delays and schedule extensions can increase costs considerably.
  • Changes in equipment and labor costs, which are also not uncommon in lengthy projects.
  • Environmental changes, such as changes in climate — again not uncommon in lengthy projects.
  • Changes in design development, which, though rare, are not unheard of. These depend on the quality of pre-execution project planning and uncontrollable circumstances such as natural events.