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Revised estimate: when and why

Short answer

A revised estimate is prepared to replace the original sanction when cost overruns exceed about 5% due to rate changes, design modifications, major quantity variations, or after a long delay. For example, a school building revised from Rs 20,000,000 to Rs 22,000,000 after deepening the foundation increased cost by 10%.

Why and when should a revised estimate be prepared? Explain with an example.

A revised estimate is a fresh estimate prepared to replace the original sanctioned estimate when it is found that the original will be exceeded.

Why it is prepared

  • To bring the sanctioned amount in line with the actual probable cost, so that payment beyond the sanction does not occur.
  • To obtain approval for the changed cost before further expenditure.

When it is prepared

  1. The cost is likely to exceed the sanctioned estimate by more than the permitted limit (about 5%, as per the rule of the agency).
  2. Changes in rates of material or labour, or a new District Rate.
  3. Design changes or changes in the specification required by the site.
  4. Major variation in quantities, such as deeper or rock foundation.
  5. Cost of the work already done and the balance work have to be re-estimated after a long delay.

Example

A school building was sanctioned for Rs 20,000,000. During excavation, the soil was found weak and the foundation had to be deepened, adding Rs 2,000,000 (10%). As the increase exceeds the limit, a revised estimate of Rs 22,000,000 is prepared, giving the original items, extra items and the reason for each change, and sent for fresh approval.

✓ Answer checked by Claude Opus 5.5 (high effort)

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