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- QUESTION
Explain how a cohesive construction project team led an by experienced project manager, in cooperation with a specialized A/E firm (Architectural & Engineering), would use cost estimates in each capacity of design, pre-construction services and operations.
Specifically, I want to know what cost estimates are, and how they are used in business.....Why they are important to the firm, and how a manager best utilizes them in the construction process. Try to back up your explanations of the cost estimate with an example of how companies use these estimates in real life and why they are relevant to a savvy project manager.
AT LEAST 150 words, Does not have to be a specific format
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APA |
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Answer
Importance of Effective Cost Estimates
Cost estimates are approximations of the costs of a project, program or operations. They are the outcomes of the cost estimation process. In business, various cost estimates are used in different ways. For instance, conceptual estimates help customers to understand whether the idea is economically feasible or not. In the business context, these estimates are used by quantity surveyor to provide estimated order of magnitude, which are based on cost per primary unit of the project. Similarly, preliminary estimates are used in business to determine initial budgets and preliminary funding scenarios of a given project, program or operations. In this context, Potts and Ankrah (2014) posited that cost estimates are directly linked to project budgets and the return on investment. As such, the estimates assist project managers to point out project risks and recommend appropriate options to deliberate on alternatives when fresh demands are to be incorporated to the project. Further, accurate cost estimates allow the business to evaluate expected benefits against expected costs to establish whether the project makes sense. Lastly, cost estimates are used in business to evaluate the periodical fund requirements and also act as guidelines for managing projects every day.
In the construction process, the project manager can use analogous estimate to compute the expected costs of the structure using known costs, which are linked to a similar structure that was constructed in the past. Using the analogous estimate, the project manager uses historical data and his or her expert judgement. Similarly, the project manager uses parametric estimates where he or she uses statistical modeling and historical data to assign a dollar value to a given project costs. Through this, the manager establishes the fundamental unit costs for the project and then sales the project’s unit costs as appropriate. For instance, a savvy project manager might comprehend the fact that a particular new home will require specific amount of dollars per square foot. In case it is an average cost and that the error margin and square footage of the planned project are known, then parametric estimate will enable the project manager to establish a budget that can fit within the stated range.
References
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Potts, K., & Ankrah, N. (2014). Construction cost management: learning from case studies. Routledge.
Appendix
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Appendix A:
Communication Plan for an Inpatient Unit to Evaluate the Impact of Transformational Leadership Style Compared to Other Leader Styles such as Bureaucratic and Laissez-Faire Leadership in Nurse Engagement, Retention, and Team Member Satisfaction Over the Course of One Year
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