cost estimate types

cost estimate types

 

 

cost estimate types

 

Meaning of cost estimate types

Cost Estimates are grouped into four general categories: (a) Planning Estimates, often referred to as Rough Order of Magnitude or Ball Park Estimates, which are intended to grossly approximate the value of a given task or program. Planning Cost estimates are of a low confidence level, since they are based upon loosely defined program ground rules, plans, definition, and Data with respect to scoping the overall schedules, statement of work, equipment lists, and delivery requirements. Because of this, a significant risk allowance is usually added to planning Estimates for undefined work and other unknowns. Planning estimates are generally required early in the program definition Cycle for the purpose of go-no go decisions. The amount of Estimating detail is minimal, and normally only a top dollar value is provided. Planning estimates are submitted for information purposes only and do not represent a formal Commitment. (b) Budget Estimates, which are normally required for funding, fiscal planning, or procurement decisions. Budget estimates are often derived through the use of preliminary functional organization estimates and gross parameters, and are based upon substantially well defined data and ground rules, but require additional definition before a firm price can be quoted. An allowance for undefined work and unknowns is generally added to budget estimates. Budget estimates denote pricing accuracies that are superior to planning estimates, but still do not represent a firm commitment. (c) Firm Cost Estimates, which are used in Cost Proposals intended to be a binding obligation on a company. These estimates are based on well defined plans and data, and are usually in response to a customer firm request for Business that has a near term go-ahead. Firm estimates require the submission of the greatest amount of substantiating detail, and the preparation of an extensive backup package, to support contractual Fact-finding and negotiations. (D) Not To Exceed (NTE), or Not Less Than (NLT), Estimates, which are commitments from a Contractor as to the maximum amount (or minimum Credit) required to accomplish (or delete) a specific task, item, or procurement. NTE/NLT estimates are prepared from planning, Budget, or firm estimate information. The amount of Contingency or NTE/NLT allowance added is strictly an estimator or management judgment factor.

 

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cost estimate types

 

cost estimate types

 

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cost estimate types

 

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cost estimate types