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ROUGH ESTIMATE
This is an inexact estimate to find out a rough cost in a short time which enables the authority concerned
to consider the financial aspect of the scheme, for according sanction to the same. Such an estimate is framed after
knowing the rate of similar works and from practical knowledge in various ways for various types of works such as:

1. Plinth area or square-meter method,

2 Cubic rate or cubic meter method,

3. Service until or until rate method,

4. Bay method,

5. Approximate quantities with bill method,

6. Cost comparison method,

7. The cost of materials and labor.

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DETAILED ESTIMATES
This consists of detailed particulars of the quantities, rates, and costs of all the materials required for
satisfactory completion of a project.

Quantities of all materials of work are calculated according to their respective dimensions on the drawings on a
measurement sheet. Multiplying these quantities by their respective rates in a separate sheet, the cost of all items
of work are figured out individually and then summarized, i.e abstracted (which is the detailed actual estimated cost
of work). All other expenses required for satisfactory completion of the project are added to the above cost to frame
the total of a detailed estimate.

A detailed estimate is accompanied by:

1. Report

2. Specifications

3. Detailed drawings showing plans, different sections, Key or Index plan etc.

4. Design data and calculations

5. The basis of rates adopted in the estimate.

Such a detailed estimate is prepared for technical sanction, administrative approval and also for the
execution of a contract with the contractor.

Quantity Estimates
This is a complete estimate or list of quantities for all materials of work required to complete the concerned
project. The quantity of each individual item of work is worked out from respective dimensions on the drawing of
the structure. To find the cost of an item its quantity is multiplied by the rate per unit for that item. The purpose of
the bill of quantities is to provide a complete list of quantities necessary for the completion of any engineering
project and when priced gives the estimated cost of the project.

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Unit Based Estimate
This type of estimate is prepared by calculating building area and then multiplying area by predefined unit
cost. And then adjusted the cost by considering building height, length, width and other necessary building
components. Required documents for preparing this type of estimate is a simple floor plan with measurement and
key elevation of the building. This type of estimation is used to check whether the project was designed within
owners budget.

Model Estimate
This type of estimate is prepared based on a model project estimate which is developed before. Preparing
this type of estimate needs answering several key questions depending on model project. Such as length and width
of building, number of base, size of base, floor height, number of bath etc. Keep in mind that proposed project should
be similar to model project. This type of estimate may prepare a details estimate of whole project or a part of project
depending on the model project.

Parametric Estimate
In this type of estimate, an estimator uses equations to prepare the estimate. This equation is the
relationship between parameters and cost of a building project. This estimate is like unit based estimate but
more complex than unit based estimate. This type of estimate is done for getting concept of proposed project cost.

EXAMPLES:

Software Development

The cost of software development is defined by factors such as business requirements, non-functional
requirements and the complexity of environments, politics and technology. It is common to use proprietary
methods, calculations and algorithms to estimate software development costs based on rankings of requirement
complexity such as story points, number of screens and integrations. Unusually complex requirements may be
estimated by subject matter experts and added in. The following is a simplified example.

Services

Services may calculate internal costs and customer price quotations using parameters that correlate with effort and
expenses. In the following example, a moving company estimates the price of an office move using a base cost and
variable cost based on the number of employees and distance. Unique complexities such as moving an air
conditioning system is added as a separate cost. This base cost is multiplied by surcharges for moving to a multi-
floor premise and working on a weekend.

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Construction

A construction company generates parametric estimates for building a house based primarily on the size of the
house in square meters. They multiple this by a "luxury factor" based on the quality of materials. They also multiple
by a "complexity factor" that captures any unusually costly elements of the architecture. Unique items such as
landscaping, systems, furnishings and interior design elements are added in separately.

Parametric estimates are often validated using estimates of experts and by comparing to industry data
using reference class forecasting.

Project Comparison Estimate

In this method, an estimator prepares estimate of proposed project by comparing similar completed
project. After preparing the comparison estimate, estimator makes adjustment for variation of proposed project
with the completed project.

Bid Estimates
The contractor's bid estimates often reflect the desire of the contractor to secure the job as well as the
estimating tools at its disposal. Some contractors have well established cost estimating procedures while others do
not. Since only the lowest bidder will be the winner of the contract in most bidding contests, any effort devoted to
cost estimating is a loss to the contractor who is not a successful bidder. Consequently, the contractor may put in
the least amount of possible effort for making a cost estimate if it believes that its chance of success is not high.

If a general contractor intends to use subcontractors in the construction of a facility, it may solicit price
quotations for various tasks to be subcontracted to specialty subcontractors. Thus, the general subcontractor will
shift the burden of cost estimating to subcontractors. If all or part of the construction is to be undertaken by the
general contractor, a bid estimate may be prepared on the basis of the quantity takeoffs from the plans provided by
the owner or on the basis of the construction procedures devised by the contractor for implementing the project.
For example, the cost of a footing of a certain type and size may be found in commercial publications on cost data
which can be used to facilitate cost estimates from quantity takeoffs. However, the contractor may want to assess

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the actual cost of construction by considering the actual construction procedures to be used and the associated costs
if the project is deemed to be different from typical designs. Hence, items such as labor, material and equipment
needed to perform various tasks may be used as parameters for the cost estimates.

For the contractor, a bid estimate submitted to the owner either for competitive bidding or negotiation
consists of direct construction cost including field supervision, plus a markup to cover general overhead and profits.
The direct cost of construction for bid estimates is usually derived from a combination of the following approaches.

Subcontractor quotations
Quantity takeoffs
Construction procedures.

Control Estimates
Both the owner and the contractor must adopt some base line for cost control during the construction. For
the owner, a budget estimate must be adopted early enough for planning long term financing of the facility.
Consequently, the detailed estimate is often used as the budget estimate since it is sufficient definitive to reflect the
project scope and is available long before the engineer's estimate. As the work progresses, the budgeted cost must
be revised periodically to reflect the estimated cost to completion. A revised estimated cost is necessary either
because of change orders initiated by the owner or due to unexpected cost overruns or savings.

For the contractor, the bid estimate is usually regarded as the budget estimate, which will be used for
control purposes as well as for planning construction financing. The budgeted cost should also be updated
periodically to reflect the estimated cost to completion as well as to insure adequate cash flows for the completion
of the project.

For monitoring the project during construction, a control estimate is derived from available information to establish:

Budget estimate for financing

Budgeted cost after contracting but prior to construction
Estimated cost to completion during the progress of construction .

Calculate Contingency
Contingency reserves are funds that a company allocates to pay for possible undesired outcomes. Some
companies simply allot a percentage of each project budget for contingency reserves. Others use the expected value
method, which calculates the expected cost of a variety of contingencies. Rather than setting aside funds to pay for
all of them in full, the company allocates reserves according to each one's probability of occurring. This method is
similar to how insurance companies calculate premiums.

List each contingency that could increase your expenses. For example, suppose that these contingencies
include having to add extra personnel to the project, outsourcing to outside contractors, failing to meet your soft
deadline and experiencing equipment malfunction.

Estimate each of these contingency's costs. For example, suppose that the four contingencies would cost
you, respectively, $32,000, $48,000, $20,000 and $12,000.

Estimate the probabilities of each of the contingencies occurring. For example, suppose that the
contingencies have, respectively, a 5 percent, 5 percent, 10 percent and 2 percent chance of occurring.

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 Multiply each contingency's cost by its probability. Continuing the example, 5 percent of $32,000 is
$1,600, 5 percent of $48,000 is $2,400, 10 percent of $20,000 is $2,000 and 2 percent of $12,000 is $240.

Add these values together. The sum of the values in this example is $6,240. You would need $6,240 in
contingency reserves.

Contingency Cost
Contingency "refers to costs that will probably occur based on past experience, but with some uncertainty
regarding the amount. The term is not used as a catchall to cover ignorance. It is poor engineering and poor
philosophy to make second-rate estimates and then try to satisfy them by using a large contingency account. The
contingency allowance is designed to cover items of cost which are not known exactly at the time of the estimate
but which will occur on a statistical basis.

For a class 1 construction cost estimate, usually needed for a bid estimate, the contingency may be classified
as an estimating and contracting contingency. This is intended to provide compensation for "estimating accuracy
based on quantities assumed or measured, unanticipated market conditions, scheduling delays and acceleration
issues, lack of bidding competition, subcontractor defaults, and interfacing omissions between various work
categories." Additional classifications of contingency may be included at various stages of a project's life, including
design contingency, or design definition contingency, or design growth contingency, and change order contingency
(although these may be more properly called allowances).

AACE International, the Association for the Advancement of Cost Engineering, has defined contingency as
"An amount added to an estimate to allow for items, conditions, or events for which the state, occurrence, or effect
is uncertain and that experience shows will likely result, in aggregate, in additional costs. Typically estimated using
statistical analysis or judgment based on past asset or project experience. Contingency usually excludes:

Major scope changes such as changes in end product specification, capacities, building sizes, and location
of the asset or project
Extraordinary events such as major strikes and natural disasters
Management reserves
Escalation and currency effects

Construction Cost
Construction cost estimating is the process of forecasting the cost of building a physical structure.

Construction costs form part of the overall costs incurred during the development of a built assetsuch as a building.
Very broadly, construction costs will be those costs incurred by the actual construction works themselves, and on
some projects may be determined by the value of the contract with the main contractor.

The construction contract may include costs that might not in themselves be considered literal construction
costs (hard costs), such as fees, profits, overheads and so on.

Many projects will also include costs that it is not possible to determine when the construction contract is awarded
(such as prime cost sums and provisional sums), and there may be construction works that are awarded by
the client outside of the main contract (such as fitting outthe interior, minor alterations to the completed works,
installation of equipment, and so on).

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In addition, the contract is likely to allow for the contract sum to be adjusted as a result, for example, of variations to
the works, claims for loss and expense, or fluctuations (a way of dealing with inflation on large projects that may last
for several years). It is because of these unknowns that clients are advised to hold a contingency.

As a result, what is considered the actual 'construction cost' of a project must be clearly defined and may not be
finally determined until well after the actual construction works have been completed. This is true, even if a contract
is described as having a 'fixed price' or 'guaranteed maximum price'.

Overhead Cost
Overhead costs, often referred to as overhead or operating expenses, refer to those expenses associated
with running a business that cant be linked to creating or producing a product or service. They are the expenses the
business incurs to stay in business, regardless of its success level.

Overhead costs are all of the costs on the companys income statement except for those that are directly related to
manufacturing or selling a product, or providing a service. A potters clay and potting wheel are not overhead costs
because they are directly related to the products made. The rent for the facility where the potter creates is an
overhead cost because the potter pays rent whether shes creating products or not.

Overhead Cost Examples

A companys overhead costs depend on the nature of the business. A retailers expenses will be different
from a repair shop or a crafters. Typical examples include:

Rent
Utilities
Insurance
Salaries that arent job- or product-specific
Office equipment such as computers or telephones
Office supplies

Types of Overhead Cost

1. Fixed expenses. No matter what your sales volume is, fixed costs must be met every month. Fixed expenses
include rent or mortgage payments, depreciation on fixed assets (such as cars and office equipment),
salaries and associated payroll costs, liability and other insurance, utilities, membership dues and
subscriptions (which can sometimes be affected by sales volume), and legal and accounting costs. These
expenses don't change, regardless of whether a company's revenue goes up or down.
2. Variable expenses. Most so-called variable expenses are really semi variable expenses that fluctuate from
month to month in relation to sales and other factors, such as promotional efforts, change of season, and
variations in the prices of supplies and services. Fitting into this category are expenses for telephone, office
supplies (the more business, the greater the use of these items), printing, packaging, mailing, advertising,
and promotion. When estimating variable expenses, use an average figure based on an estimate of the
yearly total.

Contingency Allowance
3.

The contingency allowance is the time allocated during planning for unscheduled events. Technical and
personal disruptions result in changes in the indirect production costs. The contingency allowance is calculated in
special contingency time studies, the results of which yield rates for indirect production costs. [1] The time is usually
added to the pure operations time to form a standard time in manufacturing.

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Contingency allowance is provided in construction contracts to allow for miscellaneous unforeseen costs which
cannot be classified under any other head, but is necessary for successful completion of the project. In construction
contracts usually 3 to 5 percent of contract value is provided as contingency allowance. An example of such
unforeseen cost is price escalation. If there is a saving in the contingency allowance, then this amount can be used
for execution of extra items of work. That means when variation claims are raised, it is common that the employer
will cancel the contingency allowance against variation claims, and pay the contractor.

Contingency Budget
A contingency budget is money set aside to cover unexpected costs during the construction process. This
money is on reserve and not allocated to one area of the work, and simply insurance against other costs.

Contingency Budget is the amount of money required to implement a contingency plan. If an authorized entity
approves a contingency plan, it would normally set aside a contingency budget, which would only be called upon if
the contingency plan had to be implemented.

Overhead Cost Allowance

Overhead or overhead expense refers to an ongoing expense of operating a business. Overheads are
the expenditure which cannot be conveniently traced to or identified with any particular cost unit, unlike operating
expenses such as raw material and labor. Therefore, overheads cannot be immediately associated with the products
or services being offered, thus do not directly generate profits. However, overheads are still vital to business
operations as they provide critical support for the business to carry out profit making activities.For example,
overhead costs such as the rent for a factory allows workers to manufacture products which can then be sold for a
profit. Such expenses are incurred for output generally and not for particular work order; e.g., wages paid to watch
and ward staff, heating and lighting expenses of factory, etc. Overheads are also very important cost element along
with direct materials and direct labor.

Overheads are often related to accounting concepts such as fixed costs and indirect costs.

Overhead expenses are all costs on the income statement except for direct labor, direct materials, and direct
expenses. Overhead expenses include accounting fees, advertising, insurance, interest, legal fees, labor
burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities.

Types of Overhead Cost Allowance

1. Administrative overheads
Administrative overheads include items such as utilities, strategic planning, and various supporting
functions. These costs are treated as overheads due to the fact that they aren't directly related to any
particular function of the organization nor does it directly result in generating any profits. Instead, these
costs simply take on the role of supporting all of the business' other functions

2. Manufacturing overheads
Manufacturing overheads are all costs endured by a business that is within the physical platform in which
the product or service is created. Difference between manufacturing overheads and administrative
overheads is that manufacturing overheads are categorized within a factory or office in which the sale takes
place.[17] Whilst administrative overheads is typically categorized within some sort of back-office or
supporting office. Although there are cases when the two physical buildings may overlap, it is the usage of
the overheads that separates them.

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Contingency in Construction
Contingencies are downside risk estimates that make allowance for the unknown risks associated with a project.

Typically, contingencies refer to costs, and are amounts that are held in reserve to deal with unforeseen
circumstances. However, they may also refer to other aspects of the project, for example, the programme may
include a contingency where it is important that a specific completion date is achieved.

A contingency may also refer to part of a contingency plan, that is a plan than can be enacted to mitigate project
risks, such as adverse weather, an industrial dispute, supplier failure and so on.

Monetary contingencies are typically referred to in relation to the overall client for a project. However, other parties
in the supply chain are also likely to include contingencies in their cost planning.

Whilst it is advisable for clients to hold a contingency, they might no wish to share this information with the rest of
the project team, who may see a contingency as a license to exceed the budget in the knowledge that the client has
a reserve that can be spent.

Contingencies are often expressed in terms of percentages. The percentage contingenciesapplied are at their
greatest in the early stages of the project when there are the greatest number of possible risks. But they can then
be reduced as better particulars about the project become available and some risks have passed or been overcome.

An example of how a contingency might be reduced during a project is set out below:

At the preliminary business plan stage, total cost estimates might include a 15% contingency.
In the elemental cost plan this might reduce to 10% of fees and construction costs.
On awarding the contract, 5% of the contract value might be included as contingency in the cost plan.

In addition to a contingency, the client is likely to hold retention. Retention is a percentage (often 5%) of the amount
certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by
the client. The purpose of retention is to ensure that the contractor properly completes the activities required of
them under the contract. Retention can also be applied to nominated sub-contractors, and the main contractor may
also apply retention to domestic sub-contractors.

Allowance in Construction
As a leasing incentive, an amount budgeted for a tenant to spend on improvements to the space leased.W
hen one isengaged in negotiations, care should be taken to define the tenant's obligations and the landlord's oblig
ations with referenceto the construction allowance.Also called tenant improvements allowance or TI for short.

Example: If the lease gives the tenant responsibility for all improvements below ceiling, then the considerable cos
t ofadding or replacing ceiling tiles and light fixtures must be borne by the landlord and will not be deducted from t
heconstruction allowance. One should also negoti- ate the disposition of any unused construction allowance dollars
and providefor their use as a credit against future rent or for them to be retained by the landlord in the account of t
he tenant and used atsome point in the future for rehab expenses such as replacing worn carpet or repainting inter
nal corridors.

In construction, an allowance is an amount specified and included in the construction contract (or
specifications) for a certain item of work (e.g., appliances, lighting, etc.) whose details are not yet determined at the
time of contracting. Typically:

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 1. the allowance amount covers the cost of the contractor's material/equipment delivered to the project plus
all taxes less any trade discounts to which the contractor may be entitled with respect to the item of work
2. the contractor's costs for labor (installation), overhead, profit and other expenses with respect to the
allowance item are included in the base contract amount but not in the allowance amount;
3. if the section 1 costs for the item of work are higher (or lower) than the allowance amount, the base
contract amount should be increased (decreased) by the difference in the two amounts and by the change
(if any) to the contractor's costs under section 2.

The allowance provisions may be handled otherwise in the contract: e.g., the flooring allowance may state that
installation costs are part of the allowance. The contractor may be required to produce records of the original takeoff
or estimate of the section 2 costs for each allowance item.

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SUMMARY AND CONCLUSION:
Estimates which is all about an approximate calculation or judgment of the value, number, quantity, or
extent of something. Estimates also has different types which are the following:

1. Rough estimates
It is an inexact estimate to find the rough cost in a short period of time which enables consider the financial
aspect of the scheme. Like knowing the rate of the works and the practical knowledge in different works,
activities and projects and also on the performance.

2. Detailed Estimate
Consists of detailed quantities, rates, and costs of all the materials required for satisfactory completion of
a project.
Quantities of all materials are calculated according to their respective dimensions on the drawings on a
measurement sheet. These are accompanied by:
Report
Specifications
Detailed working drawings.
Calculations

3. Quantity Estimates
A complete list of quantities for all materials of work required to complete the concerned project. The
quantity of each individual item of work is worked out from respective dimensions on the drawing of the
structure.

4. Unit Based
Calculating the building area and then multiplying area by predefined unit cost. And then adjusted the cost
by considering building height, length, width and other necessary building components.

5. Model Estimates
It is based on a model project estimate which is developed before. Preparing this type of estimate needs
answering several key questions depending on model project. Such as length and width of building, number
of base, size of base, floor height, number of bath etc.

6. Parametric Estimate
They uses equations to prepare the estimate. This equation is the relationship between parameters and
cost of a building project. This estimate is like unit based estimate but more complex than unit based
estimate.

7. Project Comparison Estimate

they prepare estimate of proposed project by comparing similar completed project. After preparing the
comparison estimate, estimator makes adjustment for variation of proposed project with the completed
project.

8. Bid Estimates
The contractor's bid estimates often reflect the desire of the contractor to secure the job as well as the
estimating tools at its disposal

9. Control Estimates

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 Both the owner and the contractor must adopt some base line for cost control during the construction. For
the owner, a budget estimate must be adopted early enough for planning long term financing of the facility.
For the contractor, the bid estimate is usually regarded as the budget estimate, which will be used for
control purposes as well as for planning construction financing. The budgeted cost should also be updated
periodically to reflect the estimated cost to completion as well as to insure adequate cash flows for the
completion of the project.

It also includes the contingency, cost, allowance, budget in construction

Calculate Contingency
It reserves are funds that a company allocates to pay for possible undesired outcomes.

Contingency Cost
Contingency "refers to costs that will probably occur based on past experience, but with some uncertainty
regarding the amount.

Construction Cost
Construction cost estimating is the process of forecasting the cost of building a physical
structure. Construction costs form part of the overall costs incurred during the development of a built asset
such as a building. Very broadly, construction costs will be those costs incurred by the actual construction
works themselves, and on some projects may be determined by the value of the contract with the main
contractor.
The construction contract may include costs that might not in themselves be considered
literal construction costs (hard costs), such as fees, profits, overheads and so on.

Overhead Cost
Overhead costs, often referred to as overhead or operating expenses, refer to those expenses associated
with running a business that cant be linked to creating or producing a product or service. They are the
expenses the business incurs to stay in business, regardless of its success level.

4.
Contingency Allowance
The contingency allowance is the time allocated during planning for unscheduled events. Technical and
personal disruptions result in changes in the indirect production costs. The contingency allowance is
calculated in special contingency time studies, the results of which yield rates for indirect production costs.

Contingency Budget
Contingency Budget is the amount of money required to implement a contingency plan

Overhead Cost Allowance

It is an ongoing expense of operating a business. Overheads are the expenditure which cannot be
conveniently traced to or identified with any particular cost unit, unlike operating expenses such as raw
material and labor. Therefore, overheads cannot be immediately associated with the products or services
being offered

Contingency in Construction
Contingencies are downside risk estimates that make allowance for the unknown risks associated with a
project.

Allowance in Construction

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 allowance is an amount specified and included in the construction contract (or specifications) for a certain
item of work (e.g., appliances, lighting, etc.) whose details are not yet determined at the time of contracting.

In estimates, there are a lot to consider before you build a structure. There are the amount of materials to be used,
the cost of each materials depending on the length, width, weight, and the uses of each materials. And also the
relationship between the contractor, the builder, and the owner on how they will manage the budget in accordance
to the estimated cost of the total cost and total amount of work to be done

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REFERENCES

http://www.dailycivil.com/different-types-estimates-civil-engineering/

http://www.acivilengineer.com/2013/03/types-of-estimates-in-building.html

https://jobsite.procore.com/what-s-in-a-word-the-difference-between-an-estimate-quote-bid-and-proposal

http://pmbook.ce.cmu.edu/05_Cost_Estimation.html

https://bizfluent.com/12811137/how-to-calculate-contingency-reserves-using-expected-value-method

https://en.wikipedia.org/wiki/Cost_contingency

https://www.designingbuildings.co.uk/wiki/Construction_costs

https://www.entrepreneur.com/encyclopedia/overhead

https://www.shopify.com/encyclopedia/overhead-costs

https://en.wikipedia.org/wiki/Contingency_allowance

http://www.howtoexcel.info/Civil_Engineering/Contingency_Allowance.htm

http://comptonllc.com/contingency-budgets/

https://www.ventureline.com/accounting-glossary/C/contingency-budget-definition/

https://en.wikipedia.org/wiki/Overhead_(business)

https://www.designingbuildings.co.uk/wiki/Contingencies_in_construction

https://en.wikipedia.org/wiki/Allowance_(money)

https://financial-dictionary.thefreedictionary.com/construction+allowance

https://simplicable.com/new/parametric-estimate

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