Why estimate the costs? Why not just decide what you want to build and get on with it? After all the costs will be what they will be, surely? This is often a common attitude held by the uninitiated.
Things are not so simple though. In everyday life we use cost estimation as one of the factors in making decisions. Whether it is deciding to buy a magazine or using the money to buy a sandwich or wondering if we should buy a new car or a used one it is important to have an idea of what the costs are likely to be and get a feel for what sort of value for money we will get for our expenditure. The same is true for any project undertaken in any industry. No one will invest money unless they have an idea of the costs involved versus the profits to be made or benefits to be gained.
To this end companies and organisations put a lot of emphasis on and spend a great deal of time, energy and money in getting the most accurate estimate they can for what they want to do.
Subhendu Moulik subhendu has worked in Project Management and Project Engineering for over 17 years in Chemicals, Petrochemical plants, Refinery and Oil & Gas facilities on reimbursable as well as Lump Sum Turn Key projects for EPCM and Client companies. Frank Feely Frank has worked in Project Controls for over 30 years in the Petrochemical, Oil and Gas, Pharmaceutical and Semi-conductor industries for Contracting Companies, EPCM Companies and Client Companies in Europe, Middle East, Africa and Far East.