This type of cost estimate is generally created by the construction contractor or another party who will be directly associated with the field operations. The contractor estimate is then abridged to a working construction budget and develop the foundation of the construction cost control system.
While the construction process is going on, cost accounting methods are utilized to recover actual construction expenses from current construction operations. This information is then applied for the purpose of controlling the cost on the current project and for working out the cost of future projects. Besides, the cost system offers significant information related to project financial control.
Preliminary Cost Estimates: Preliminary estimates of future construction expenses, are prepared throughout the project planning and design stages on the basis of approximation because these are accumulated prior to define the project entirely. This type of conceptual estimates differs from ascertaining the final detailed estimate of construction costs.
Basically, all conceptual price estimates are prepared on the basis of some system of gross unit costs which are acquired from earlier construction work. These unit costs are guessed forward in due course to focus on present market conditions, project location as well as the specific character of the job currently being considered. The following methods are followed to make preliminary estimates.