What is the cost estimate, its composition

The cost or cost estimate is intended for grouping of the forthcoming expenses of the enterprise directed for the performance of any activity. In addition, there are estimates aimed at financing the activities of any enterprise or organization. The goal may be the performance of design or construction works and the like. Thus, this document represents a financial plan, which should be compiled and approved in accordance with the procedure established by the company's charter and legislation.

The cost estimate is made for each type of cost. 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 supplementary), as well as social insurance and other expenses.

Overhead costs in the estimate are not tied to any intermediate result, but are related to 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 cost 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 a document that should always be kept in front of 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 the planned. It is for this that an estimate of costs 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 compiled if the amount of work and the costs of these works are not final and are subject to further clarification. This kind of estimates is made for buildings and structures, as well as for general 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, compilation of estimate documentation 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 recalculation 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.