Estimated costs or expenses are intended to group future expenses of the enterprise aimed at carrying out any activity. In addition, there are estimates aimed at financing the activities of any enterprise or organization. The goal may be the implementation of design or construction works and the like. Thus, this document represents a financial plan, the preparation of which and approval should be carried out in accordance with the procedure established by the charter of the enterprise and legislation.
Cost estimates are compiled for each type of cost. This can be raw materials and basic materials, an item of expenses on returnable waste, auxiliary materials, fuel and energy, on wages (it is necessary to include both basic and additional), as well as on social security contributions and other expenses.
Overhead costs in the estimate are not tied to any intermediate result, but are related to the whole project. That is, it may be the cost of a consultant, training of specialists or travel expenses. Fixed costs are also distinguished - these are administrative and general overhead expenses. This type of cost does not imply immediate payment, but they do have a place to be, and if the company seeks to continue to exist, then ultimately they must be paid.
Cost estimates are a document that should always be kept in front of your eyes. By comparing the actual indicators with those laid down in the estimate, you can monitor the implementation of the
financial plan
. Being able to read the estimates data correctly, it will always be possible to catch the moment when the actual expenses will not correspond to the planned ones. It is for this that a
cost estimate is required. The preparation of a local estimate will more accurately reflect the estimated costs. As a rule, it includes a detailed calculation with detailed transcripts. A local cost estimate is compiled if the scope of work and the cost of this work are not final and are subject to further clarification. This
type of estimate is compiled for buildings and structures, as well as for general site work. In order to compile this document, schedules, working drawings, equipment specifications, guiding technical materials can serve as source material, it can also be information on tariffs and prices for consumption resources and the like.
For any project, the preparation of budget documentation is considered the most necessary moment. The information contained in this document must be reliable, otherwise the calculation of profitability will be fictitious. As a result, instead of a profitable enterprise, you can get unprofitable. The preparation of such an estimate is carried out in the basic price level, in the future there is a conversion to the current level, according to indexing to cost elements.
Thus, the cost estimate is the documentation that includes the planned expenses of the enterprise in the coming period of production and financial activities.