---
title: "Revised estimate: when and why"
subject: "Estimating and Costing"
chapter: 3
key: "semester_7/estimating_and_costing:revised-estimate-when-needed"
source: https://www.bctengineer.com/q/semester_7/estimating_and_costing/revised-estimate-when-needed
site: BCT Engineering
---

# Revised estimate: when and why

Estimating and Costing · Chapter 3: Types of Estimate

- Asked in: 2079 Bhadra, 4 marks; 2074 Chaitra; 2066 Bhadra (old course), 2 marks (asked 3 times)
- Video: [Revised Estimates](https://www.youtube.com/watch?v=BAUW9aP9wwY) — Know The Rules
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/estimating_and_costing/revised-estimate-when-needed
- Whole chapter: https://www.bctengineer.com/md/semester_7/estimating_and_costing/chapter-3

## Question

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

## 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%.

## Answer

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.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. When is a revised estimate needed?
   A. When cost is below the estimate
   B. When cost is likely to exceed the sanctioned estimate by more than about 5%
   C. When the work is complete
   D. When any one item rate is checked
   Answer: B. It brings sanction in line with probable cost. (Key point: Trigger limit)

2. Why is a revised estimate prepared before further spending?
   A. To reduce the quantity of work
   B. To cancel the contract
   C. To obtain approval for the changed cost so payment beyond sanction does not occur
   D. To avoid design
   Answer: C. Expenditure beyond sanction needs fresh approval. (Key point: Purpose)

3. Which is a valid cause for a revised estimate?
   A. Painting a wall twice
   B. Change of office hours
   C. A minor rounding error
   D. Deeper or rock foundation causing major variation in quantities
   Answer: D. Design, rate and quantity changes are the typical causes. (Key point: Cause)

4. A Rs 20,000,000 school needs Rs 2,000,000 more for deeper foundation. What happens?
   A. A revised estimate of Rs 22,000,000 is prepared, as the 10% rise exceeds the limit
   B. Nothing; the rise is below the limit
   C. A supplementary estimate of Rs 2,000,000 only
   D. The contractor bears the cost
   Answer: A. 10% is more than the 5% limit. (Key point: Example)

## Related in Estimating and Costing

- [Revised vs supplementary estimate](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Arevised-vs-supplementary) — Estimating and Costing, chapter 3
- [Types of estimates and when prepared](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Atypes-of-estimates-circumstances) — Estimating and Costing, chapter 3, asked 4×
- [Approximate estimate: what and when](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Aapproximate-estimate-when-needed) — Estimating and Costing, chapter 3, asked 6×
- [Complete estimate: why and when](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Acomplete-estimate-why-when) — Estimating and Costing, chapter 3