--- title: "Purposes of estimating; estimate never actual cost" subject: "Estimating and Costing" chapter: 1 key: "semester_7/estimating_and_costing:purposes-estimate-never-actual" source: https://www.bctengineer.com/q/semester_7/estimating_and_costing/purposes-estimate-never-actual site: BCT Engineering --- # Purposes of estimating; estimate never actual cost Estimating and Costing · Chapter 1: Introduction - Asked in: 2066 Bhadra (old course), 5 marks - Video: [Part 19 ! Estimating and Costing ! Detailed estimate ! Rough cost estimate ! Types of estimate ! SSC](https://www.youtube.com/watch?v=0vU2E4GznJk) — NARAYANA COACHING CLASSES - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/estimating_and_costing/purposes-estimate-never-actual - Whole chapter: https://www.bctengineer.com/md/semester_7/estimating_and_costing/chapter-1 ## Question What are the purposes of estimating? 'An estimate is never the actual cost of the work', justify your answer. ## Short answer The purposes include knowing probable cost, obtaining approval, preparing tender documents, planning resources, scheduling, cost control, and comparing alternatives. An estimate is never the actual cost because market rates and quantities often change, unforeseen conditions arise, and productivity varies from norms. ## Answer #### Purposes of estimating 1. To know the **probable cost** of the project and decide on its feasibility. 2. To obtain **technical, administrative and financial approval** and budget allocation. 3. To prepare **tender documents**, the engineer's estimate and the **bill of quantities**. 4. To plan the **materials, labour and equipment** needed, and the work schedule. 5. To fix the **period of completion** and the cash flow. 6. To **control cost** by comparing actual expenditure with the estimate. 7. To determine the **rate and payment** for variations, and compare design alternatives. #### An estimate is never the actual cost An estimate is a forecast prepared on the assumption of the present rates, the drawn quantities and standard norms. In real work these assumptions change: - **Rate variation:** market prices and wages change from the time of the estimate; the District Rate itself is revised every year. - **Quantity variation:** unforeseen site conditions (rock, loose soil, water) and design modifications change the executed quantities. - **Productivity and wastage:** actual consumption of materials and labour differs from norms. - **Unforeseen events:** delay, weather, strikes, shortage of material. - **Errors and approximations** in measurement, and the limited accuracy of preliminary estimates. Hence, an allowance for contingency is made, and when the difference becomes large a revised or supplementary estimate is prepared. The estimate is therefore a guide for decision and control, not an exact record of cost. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which is a purpose of estimating? A. To record the final payment B. To avoid preparing drawings C. To prepare tender documents, the engineer's estimate and the BOQ D. To make actual cost known before work Answer: C. The estimate provides material for tendering and BOQ. (Key point: Purposes) 2. How does the District Rate illustrate rate variation? A. It never changes B. It is fixed for the whole project life C. It is set by the contractor D. It is revised every year so prices differ from the estimate Answer: D. Annual revision of rates shows prices change over time. (Key point: Rate variation) 3. What does productivity and wastage variation mean? A. Actual consumption of materials and labour differs from the norms B. Norms are always exactly followed C. The design is modified D. Taxes change Answer: A. Real work does not exactly follow the norms. (Key point: Productivity) 4. What is done when the difference between estimate and actual becomes large? A. Work is stopped permanently B. A revised or supplementary estimate is prepared C. The estimate is hidden D. Nothing is done Answer: B. Large differences are handled by revised or supplementary estimates. 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