As already stated in the previous lecture (Lecture-1 of this module), there are different types of estimates which are prepared at various stages during the life of a project starting from the initial phases to its final phase on the basis of the available information at the time of preparation of the estimates. The range of expected accuracy is more in the estimates which are prepared during initial stages and it narrows down as the project progresses with the availability of more detailed information and increase in the level of project definition. In addition to the project parameters, the degree accuracy of an estimate also depends on the experience, ability and judgment of the estimator. The construction cost estimate is broadly classified into two types approximate estimates and detailed estimates. The approximate estimates are prepared during initial stages of the project life cycle. These estimates are also known as preliminary, budget o r order-of-magnitude estimates and are prepared to determine the preliminary cost of the project. From the approximate cost estimates, the owner of the project can be able to know whether the project can be undertaken within the available budget. There may be more than one design alternative for a project depending on the location, site conditions, type of structure etc. The estimator can determine the approximate cost of various alternatives for the project by taking preliminary design information from designer and can obtain the economical alternative that is affordable within the available budget for the project.

Detailed estimates are prepared in accordance with the complete set of contract documents. As already stated, the contractors prepare the detailed estimates before biding for the project by thoroughly reviewing the contract documents. Project site visit by the contractor personnel may be required to identify the parameters that can influence project cost and accordingly the estimate can be adjusted. The detailed cost estimate showing the bid price of the project is important to both the project owner and the contractor, as the bid price represents the amount the contractor will receive from the owner for completing the project in accordance with contract documents. The different types of cost estimates which are prepared during various phases of a project are described below.