Estimation of Project Cost for a Green Field Steel Project...

Estimation of Project Cost for a Green Field Steel Project Estimation of the project cost for a green field steel project is essential for ensuring that the available resources for the project are used effectively and wisely. The basic requirements of the project cost estimates are that these estimates are to be prepared on an ‘unlikely to be exceeded but not excessively conservative’ basis for various stages of the project life cycle to provide confidence in project priority, affordability and strategic fit. An accurate estimate goes a long way toward supporting a successful project. Quality cost estimates are also necessary in maintaining stakeholders’ confidence and trust throughout the life of the project. Hence, cost estimates are to reflect an overall accuracy which is indicative of the level of information available at the time the estimates are being developed. Cost increases over and above project budget are a constant concern of the stakeholders and the senior management. Reliable cost estimates are necessary for responsible financial management at every stage of the project. Unreliable cost estimates cause significant problems during the project implementation. Unreliable cost estimates can also lead to staffing and budgeting decisions which can result into incorrect and inefficient use of the available resources. The ‘project cost estimate’, as used during the project development process, includes all capital outlay costs, including right-of-way, structures and landscaping. Project cost estimates are never to be artificially reduced to stay within the funding limits, nor they are to be reduced for the purpose of making the funds available for the project. Likewise, project cost estimates are not to be artificially raised beyond the contingency percentages necessary for the project unless the increase is adequately justified. Project cost estimates are prepared for a planned project implementation schedule. Any delay...