Purposes of estimating and costing

Estimating and costing means finding the quantities and the probable cost of work before it is done. Its main purposes are:

1. Probable cost: to know the total money needed, so the owner can decide on the project.
2. Approval and budget: administrative and financial sanction, and fund allocation, are given on the basis of the estimate.
3. Tendering: the engineer's estimate is the basis for inviting bids and for judging the reasonableness of the bids received.
4. Material, labour and equipment planning: quantities from the estimate give the materials to be ordered and the manpower and machines required.
5. Time scheduling: with the quantities and the productivity, the construction period and the programme are fixed.
6. Cost control: actual expenditure is compared with the estimate, so overspending is noticed in time.
7. Contract payment: the BOQ rates are used for interim payments and for valuing variations.
8. Comparison of alternatives: different designs or materials can be compared on cost.
9. Loan and cash-flow planning: banks and donors need a reliable cost figure.