What is Project Cost Estimating?

Project cost estimating is one of the critical activities to successfully implementing a project in support of an investment opportunity by an owner entity - whether a private business or grovernment. Project cost estimating is initially important to the evaluation of alternatives being considered as potential investments by an owner entity; and ultimately establishes the amount of funding required to see the project through to successful completion. Accurate estimating is essential to maximizing the effectiveness of capital project investment decisions.

A company that consistently selects the right projects and executes them with excellence maximizes the return on capital investment and thus increases shareholders value. Estimating supports the business evaluation to select the right project; and then establishes the realistic, attainable project budget required to execute the project to meet all project objectives. Cost estimating is a core function to support decision-making throughout the asset management and project control lifecycles.

Project cost estimates are prepared at various times during the project development lifecycle, and may employ a wide variety of estimating techniques and methodologies to support a business decision. During the project development process, cost estimates will transition from conceptual estimates used to support the selection between project alternatives to definitive estimates used to establish final project funding requirements. In between, various cost estimates are prepared to re-evaluate project economics and used to support a decision to progress to the next stage of project development (or potentially cancel the project because the estimated project cost no longer supports an effective return on investment).

It is important to recognize that each cost estimate is a prediction of the probable costs of a project, of a given and documented scope, to be completed at a defined location and point of time in the future. Every estimate involves assumptions and uncertainty; and is associated with a range of potential costs. Therefore, effective cost estimating requires an assessment of uncertainty to establish the single value within the range of potential costs that matches a level of risk acceptable to the decicion maker(s).

Conquest Consulting Group is a recognized expert in providing both estimate preparation and estimate review/validation services to process industry owners. We are skilled at using all types of estimating techniques, and maintain our own process industry cost database (knowledgebase) of labor hours and material costs to support both estimate preparation and review/validation. We utilize a variety of estimating tools appropriate to te specific estimate. We also have developed a best practice cost estimate risk analysis techniques and tool to effectively address estimate uncertainty and support appropriate contingency determination. We effectively assist many owner organizations with estimating organizational development and improving their internal estimating competencies.

Our executive team and consultants are active in developing many of the AACE International Recommended Practices on cost estimating and other cost engineering topics. We value our association with AACE International and in supporting the development of skills, knowledge and data for use by the project cost estimating and cost engineering commmunity.

Please refer to our White Papers for additional information on cost estimating topics.