Basic Definitions For Cost Estimation
Temmuz 23, 2011 Yorum bırakın
CAPEX (CAPITAL COST ESTIMATE) : Represents the total capital cost of the project, including engineering, material, construction and management costs.
ALLOWANCES: Used to reduce the risk of overrun due to “KNOWN UNCERTAINTIES”
a. Design Growth / Design Development
b. Extraordinary Freight Cost (Air freight, special cargo,etc.)
c. Forward Escalation
d. Cut/Waste (Bulk Material)
CONTINGENCIES: Used to reduce the risk of overrun due to ” POTENTIAL UNCERTAINTIES”
a. Incomplete Project Definition
b. Currency Fluctuation
d. Does not cover force majeure, scope changes, claims,etc.
DIRECT COSTS: Costs directly attributed to a job or a piece of project equipment
INDIRECT COSTS: These are often referred to as ” OVERHEAD COSTS” and cannot easily be allocated to one job or projects. The process of recovering overheads is known as ” ABSORPTION COSTING”. Clients for large capital projects are very interested in proposed overhead rates, chargeable to projects and required detailed of how the overheads are to be allocated.
FIXED COSTS: Costs are said to be fixed when they remain unchanged and must continue to be incurred, even though the workload fluctuates , (e.g.management salaries, rent insurance,etc.)
VARIABLE COSTS: These are costs which are incurred at a rate depending on the level of the work activity:
e.g. – Material
– Spare Parts
– Utilities (Power, Water, System)
Thanks to Dr. Muhammad Elrabaa