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Preparing the budget for a project is one of the major processes at the initiation phase, which aims to identify, estimate and justify the costs necessary to perform project goals and activities. This process results in developing a budget sheet which is a programme and fiscal document for managing project expenditure, performance and funds allocation. In this quick guide we’re going to describe how to prepare a project budget in three generic steps
it differs from the point of view you analyze whether you are the owner or the contractor
as a client you will focus on whether the project is feasible or no, the cash flow availability and the revenue.
as a contractor you will get more detailed into the analysis of cost , the tender specs, the client reputation and your financial capabilities.
Current cost / competition ; demand ; technology and escalation cost
1) Study the Duration & Location: Prepare supervision, indirect costs accordingly.
2) Study the technical scope of work: Prepare and price the material take offs, calculate construction costs and overheads for the same.
3) Other costs: finance charges ( bank guarantees, L/C Charges, insurance etc), contingencies (depends on clarity of the scope of work), office overheads etc.
The first thing after analyzing the costs of a new project is to check it with the allowable budget of the stakeholders to see if the budget is within the limit, if not, we should make technical arrangements to reduce the cost.
first i will take my time and prepare a list of all the costs associated with project ( direct and indirect costs man power including all costs that i am anticipating to come during the whole lifetime of the project ) the second step will be to check the value of the project and compare it with the cost taking into consideration the payback time and check if this project profitable for the company
Mainly if you are a Contractor you will check the direct cost and preliminaries and your financial status to build up a rough cost estimate figure to figure out the feasibility of the project to your company.
The first step before starting the estimation of a project. I would survey the site to look for indirect costs, unseen costs and the availability of resources like electricity, water and transportation to the site.
Look to the budget, identify risk, outline the requirement, estimate cost,arrive budget.
