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Cost Budgeting vs. Cost Estimating

4 replies [Last post]
Sun, 2005-10-23 20:20
Carmen Muñoz
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Joined: 23 Oct 2005
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Groups: Petro-Chem / Oil & Gas
Hi, could anyone tell me what’s the difference between Cost Budgeting and Cost Estimating, please? Thank you.
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Replies

Thu, 2005-12-15 00:08
#1
manulal inasu
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Joined: 15 Oct 2005
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Hi Carmen

An important aspect of controlling costs on a Job or project is to know not only the costs already booked to a job, but also those costs to which you are already committed through purchase orders you have placed with suppliers. These job commitments become costs as purchase orders are delivered and suppliers submit invoices for payment.

Earned value is simply the budgeted cost of whatever work you have completed.

Committed cost comes under actual cost calculation.

Regards,

Manu
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Wed, 2005-12-14 04:43
#2
Naveed Tariq, PE,...
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Joined: 19 Dec 2002
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An estimate is a best guess/projection of the eventual cost.

Budget is the distribution of estimate over time. (Monthly cash flows)

You can use this definition for both resource and cost.

Cheers!!
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Wed, 2005-10-26 14:08
#3
Carmen Muñoz
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Joined: 23 Oct 2005
Posts: 4
Groups: Petro-Chem / Oil & Gas
Thank you for your response. Although I know this forum specializes in planning and scheduling, I am pretty sure there are professionals with experience in the cost control area. I would appreciate any brief idea of what cost commitment is. I also would like to know if the use of cost commitment excludes the use of earned value (and viceversa). Thank you again.
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Mon, 2005-10-24 09:43
#4
Bernard Ertl
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Joined: 20 Nov 2002
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Groups: Petro-Chem / Oil & Gas, TURNAROUND & SHUTDOWN (T/A & S/D)
An estimate is a best guess/projection of the eventual cost.

A budget is the amount of money available/approved to get the job done.

The budget is usually based upon an estimate, but may be higher or lower.

Bernard Ertl
InterPlan Systems
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