ABSTRACT
Project management requires cost estimates to establish detailed budgets, help control spending, assess manpower requirements and perform many other management procedures. A company's sales executives, sometimes in committee with their more senior company management, must rely on cost estimates when deciding the price to be offered in proposals to external customers for aviation projects. This chapter lists a few cost accounting terms that occur frequently in project work, such as materials burden, and overhead rate. Some companies find it useful to classify project cost estimates according to the degree of confidence that they deserve. These classifications depend on the quality of information available to the estimators, the time allowed for preparing the estimates and the stage reached in the project life cycle. The chapter provides one example of a classification system used by an engineering company for its project cost estimates: ballpark, comparative estimates, feasibility estimates, and definitive estimates.
