What is the cost estimate, its composition
Estimates of costs or costs are intended fora grouping of the company's forthcoming expenses, aimed at carrying out an activity. In addition, there are estimates aimed at financing the activities of any enterprise or organization. The goal may be the execution of design or construction works and the like. Thus, this document represents a financial plan, the preparation of which and approval must take place in accordance with the procedure established by the company's statute and legislation.
The cost estimate is made for each typecosts. This can be raw materials and basic materials, the item of costs for returnable waste, auxiliary materials, fuel and energy, wages (it is necessary to include both basic and additional), as well as social insurance and other expenses.
Overhead costs in the estimate are not tied toto some intermediate result, but have to do with the whole project. That is, it can be the cost of a consultant, training specialists or travel expenses. Also distinguish and constant costs are administrative and general overhead expenses. This type of costs does not imply immediate payment, but they have a place to be, and if the firm seeks to continue to exist, then ultimately they must be paid.
The cost estimate is the document thatshould always be kept before your eyes. By comparing the actual figures with the estimates, you can monitor the implementation of the financial plan. Knowing how to properly read the estimates, it will always be possible to catch the moment when actual spending will not match planned. It is for this that the cost estimate is required. The creation of a local estimate will more accurately reflect the estimated costs. Typically, it includes a detailed calculation with detailed transcripts. Local cost estimates are made if the amount of work and the costs of these works are not final and are subject to further clarification. Such kind of estimates is made for buildings and structures, as well as for general site works. In order to compile this document, schedules, working drawings, equipment specifications, guidance technical materials, as well as information on tariffs and prices for consumption resources and the like can serve as an input.
For any project, the preparation of an estimatedocumentation is considered the most necessary moment. The information contained in this document must be reliable, otherwise the calculation of profitability will be fictitious. As a result, instead of a profitable enterprise, you can get unprofitable. The preparation of such an estimate is carried out at the basic price level, then the conversion is carried out to the current level, according to indexing to the cost elements.
Thus, the cost estimate is the documentation, which includes the costs planned by the enterprise in the forthcoming period of carrying out production and financial activities.