Estimations, preliminary estimates, budgets, settlements, final accounts! Distinguish the five types of cost calculations in engineering projects

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Estimation refers to investment estimation. It is a scientific estimation of the total construction cost of a construction project at the decision-making stage. The decision-making phase is further divided into four stages: opportunity study, project proposal, preliminary feasibility study, and detailed feasibility study. As the project becomes more specific and detailed, estimates of varying levels of precision can be obtained in accordance with the investment estimation procedures. At the request of the project owner, a comprehensive estimation report can be prepared during the detailed feasibility study stage. The estimate refers to the design estimate. It is during the design phase that, based on preliminary design or construction drawing plans, estimated cost indicators, estimated cost rates, as well as current market information regarding pricing standards, the total investment required for a construction project is calculated step by step (at the level of individual units, separate projects, and the entire construction project), in accordance with the regulations for estimating costs in construction projects. The budget refers to the construction drawing budget. It is during the period from the completion of construction drawing design to the determination of the tender control price and bid quotes in the bidding phase (so-called the transaction phase) that the cost of building installation works is calculated. Taking the construction drawings for building installation as the basis, and in accordance with current pricing standards (the Specification for Bill of Quantities Pricing in Construction Projects and the relevant specifications for calculating engineering quantities), consumption quotas, market prices of labor, materials, and machinery, as well as cost standards, the cost is computed step by step—for each sub-item, sub-project, unit project, and individual project—in compliance with the procedures for preparing and reviewing construction project budgets. When required by project specifications, these figures are also aggregated to arrive at the total investment needed for the entire construction project. Settlement refers to project settlement and completion settlement. Traditional settlement involves verifying and settling the actual project cost (in this context, cost in the second sense) after the completion of construction and installation work. Following the development of industry standards and regulations, the current definition of settlement (for reference) involves using the pricing method specified in the tender documents, in accordance with the construction contract, as well as any change orders issued during the construction process. The settlement of amounts owed for the work carried out, as well as the final settlement upon completion, is done in compliance with the contract provisions, the settlement rules for construction projects, and the latest pricing standards. Compile and prepare the final settlement documents for the actual cost of construction and installation projects. The specifications for list-based pricing advocate that the final settlement should consolidate the results of cost calculations throughout the construction process, providing a summary and final determination of the actual cost of building and installation projects. The final account is the final settlement for a project. Upon the completion of the entire project, the construction entity prepares a financial summary of the actual costs incurred from the project’s initiation to its completion and commissioning for operation. It is necessary to complete relevant reports, conduct construction cost analysis, and compare the two calculations (final accounts and preliminary estimates) of indicator data, etc. What is the difference between an estimate and a budget? To understand the estimated cost of a project, one must first understand the project budget. The budget price (budget cost) of a project, which is calculated by the design or construction entity based on the construction drawings of the project in question, along with the construction organization plan (or construction scheme), as well as relevant basic data such as the budget quotas for building and installation works and the fee calculation standards, is referred to as the project budget. Construction project budgets generally refer to two categories: estimates and budgets; in other words, a construction project budget is the term used to denote both estimates and budgets together. The main differences between estimates and budgets are as follows: (1) Their roles are different. The budget estimate is prepared during the preliminary design phase and serves as a document for submitting investment requests to ** and the local authorities. Once approved, it is used to formulate fixed asset plans, serving as a basis for controlling investment in construction projects ； Budget estimation is carried out during the construction drawing design phase; it serves as the price indicator for construction products and represents the base figure for project costs. (2) The bases for preparation are different. The estimate is prepared based on estimated quota or estimated indicators; its items are expanded yet simplified, giving it a high degree of generality. The budget, on the other hand, is prepared using budget quota and comprehensive budget quota, with more detailed and significant items. (3) The content of compilation is different. The estimated budget should encompass all aspects of the construction project; for instance, the overall estimate must include all costs required from the preparatory phase up to the completion of acceptance and handover for use ； Generally, no overall budget is prepared; instead, only budgets for individual projects and comprehensive budget documents are created. These do not include costs from the preparation phase (such as surveying, land acquisition, and training costs for production staff). Generally, settlement is a part of the final accounts and serves as the basis for them. The final accounts must not exceed the budget; the budget must not exceed the preliminary estimate; and the preliminary estimate must not exceed the rough estimate. The impact of the project construction process On it, the project construction process is as follows: project proposal and feasibility study stage—preliminary design stage—construction drawing design stage—bidding stage—contract implementation stage—completion acceptance stage. Correspondingly, the order in which these terms appear is: investment estimate—design estimate—budget cost—contract price—settlement price—actual cost (final cost). There are two types of estimates: the investment estimate from the feasibility study and the preliminary design estimate; while budgets can be further divided into the budget based on construction drawings and the construction budget. The budget for capital construction projects refers to the overall sum of these estimates, approximations, and budgets. Investment control is a key aspect and a challenging task in construction project management. At different stages of a project, the project investment is referred to by various terms such as estimation, preliminary estimate, budget, settlement, and final account. These calculations are based on different criteria and serve different purposes; their accuracy also gradually improves, with each subsequent calculation providing a more accurate reflection of the actual investment required for the project.