Estimated cost of construction - what is it?

The estimated cost of the project is an integral part in the construction of any structure. This moment from the position of legal relations is regulated by the Civil Code. It is of interest to business entities, which are customers and contractors.

Introductory information

Work must be carried out in accordance with existing technical documentation and estimates. This is stated in article 743 of the Civil Code. It rightfully reflects the relationship between individual documents. It should be noted that the case is not limited to the Civil Code only. Other regulatory documents are involved in regulation. For example - the Town Planning Code or letters of the Ministry of Regional Development of the Russian Federation. The estimated cost of construction is a certain amount of cash that is needed for construction. It should be noted that state regulation often allows for confusion and identification of the semantic and conceptual apparatus of budget valuation and pricing.

Adjustment aspect

It should be noted that the implementation of economic calculations during planning, for example, budgeting, cannot be an object of influence for legislative and executive authorities (if this does not apply to state projects). Regulation is carried out in the process of civil law relations, which are based on the Constitution and the Civil Code of the Russian Federation. The estimated cost of construction is determined through independent professional and commercial activities of specialists in the relevant field. Article 421 of the Civil Code stipulates that legal entities and citizens have the freedom to conclude contracts. Coercion in this case is unacceptable. Also, Law No. 158-ФЗ dated September 25, 1998 “On Licensing Certain Types of Activities” contains no requirements for preliminary qualification before drawing up the estimated cost of construction. This is due to the fact that this work does not affect the strength, stability and operational safety of the buildings being created.

How is the cost issue resolved?

Start with article 709 of the Civil Code. It considers price as an economic justification for value. It is worth mentioning such important aspects:

1. The contracts should indicate the price when performing work or the method of determining it.
2. It is necessary to include compensation for the costs of the contractor, as well as remuneration due to him.
3. The price of the work (as one of the options) is made out by drawing up estimates.

As you can see, according to the current legislation, this is not an obligatory stage of construction. You can do without it. But it’s better to calculate all the expenses.

Parsing Terminology

The estimated cost of construction is not as easy as it might seem at first glance. To better understand, you need to clearly understand what certain terms mean:

1. Construction estimate. This is a general concept. It combines all kinds of economic calculations, as well as justifications in construction. It affects the stages of planning, organization of activities and cost accounting during the construction of the facility. Needs may also be included for the useful life. This estimate allows you to get an idea of ​​the average, socially necessary cost of resources, as well as individual delays. It can take on various forms and qualities - it all depends on the tasks set and the existing interests of consumers.It is here that all the elements of the used economic justifications are displayed, the initial information for the calculations, the sources of its receipt and the result are provided. In this case, the aim is to meet the needs for all types of resources that are necessary for the construction of the facility.
2. Estimated documentation. This is the result of calculations that are designed in a certain way so that it is easy to take into account at the main stages in the planning and management of the project.
3. Estimated cost. An integral part of the calculations. This is the most significant and important part of the results obtained in the development of estimates. It establishes how much construction needs financial resources to achieve the goal. Physical indicators (material consumption, need for services, volumes and lists of work) in kind measures are determined in full. They are constant and unchanging characteristics of the project. But at the same time, at any arbitrary moment in time, the estimated cost of construction can be calculated at current new prices. This allows you to quickly adjust documents and requests if necessary.

About cost indicators

Two things are of greatest importance here:

1. Estimated cost is applied in the pre-negotiation period of the project.
2. After tenders / tenders have been held and contractual agreements with performers have been concluded, legal relations and mutual settlements are carried out between participants on the basis of agreements reached.

A little more about the estimated cost

So, it is obtained as a result of calculations. Through it, you can find out the objectively necessary costs that are needed to build an object. However, we need to determine the estimated cost of building objects from a practical point of view. It acts as an element of the cost mechanism of pricing. This means that the determination is carried out by calculating the total costs in the construction process, the estimated level of the cost of the upcoming construction of the object is established. The estimated cost shows what is the need for cash (financial resources) for the construction of the building. Moreover, it has a generalizing nature. That is, it is necessary to take into account the needs for all construction services and resources. This parameter can change at any time.

Cost accounting

And what to do with this possibility of change? Settlements are created for time periods. The following levels are distinguished:

1. Base estimated cost. How to find her? It is determined by calculating the basic index method with indicators of the cost of services, work and resources of past periods. In estimated pricing, it is developed on the basis of prices for construction work that were carried out on the selected date. But accounting is not limited to this.
2. Basic estimated cost. Do not confuse because of the similarity with the first paragraph. This parameter is determined during the development of tender documentation. He acts as an initial calculation indicator for customers, starting from which contract competitions will be held, contractual relations will be formed and determined with the cost of construction. This parameter is used to set prices for the project development date.
3. Current estimated cost. It is established by means of a calculation that uses current prices of current prices that have developed in the regional markets for construction services and resources. The current value is indicated for reporting on the implementation of the project.

A small digression about prices

Changes in the estimated cost of construction can occur at the most unexpected moment. This is due to the activities of a market economy. So, a project can start at one price, and end at a completely different price. In addition, the calculation of the estimated cost of construction is also complicated through the influence of a number of factors.For example, administrative, environmental, climatic, and demographic conditions can greatly affect the final price. Uneven location of enterprises, difficulties with delivery - this list can be maintained for a very long time. Therefore, it is always necessary to keep in mind that the cost can change significantly before the conclusion of the contract.

Adjustment of indicators

Indices of changes in the estimated cost of construction help in this matter. They are indicators through which you can find out how much the price of the performance of work, the acquisition of materials and generally the completion of projects will change. Using indices, you can predict changes in value and make appropriate adjustments to your activities.

About the structure of financial assets

The determination of the estimated cost of construction should take into account:

1. Direct costs. This construction materials, structures and products, transportation costs, machinery and equipment, as well as labor costs.
2. Indirect costs. These include all expenses that are necessary for the normal process of activity, which are justified by calculations.
3. Estimated profit. This refers to the necessary remuneration of the contractor. This profit should provide payments on taxes and obligatory payments, create a material incentive fund, the necessary reserves of financial resources and contribute to the development of the organization in the future, as well as receive net income to beneficiaries.

Specificity of the contract price

Studying what the estimated cost of building an object is, you need to pay attention to a number of important points:

1. Market price. Defined as an average. Objectively determined cost of the construction of a particular object in a certain region in a given calendar period with the maximum consideration of the existing situation. Refers to the work, resources, services and commercial interests of the parties.
2. Surrogate price. It can be established by the contractor or customer without fail and unilaterally. This occurs if there is no competition or a monopoly position. It is calculated on the basis of the data that were obtained using estimated norms, indices, prices, which were developed and approved by administrative and departmental executive authorities (it is possible that of industry management).
3. Firm price. Set at the time of signing the agreement. Not subject to revision. Exception - if the customer makes changes to the project during its implementation.
4. Moving price. It takes into account that the value of the value that was achieved in the contract can be revised if, at the time of delivery of the object, a change in the conditions for its sale has occurred. This price is characterized by a clause on a possible increase / decrease. There must also be a specific source, which acts as the basis for all changes taking place. Its role may be a market publication or document.
5. Moving price. Its feature is that it is determined at the time of execution. At the same time, the base price is revised taking into account the changes that have occurred. Alternatively, it can be specified in the form of a formula when multiplication occurs by the value of the index.
6. Inventory (book) value. It is necessary to determine the amount of financial resources required for the completion of work. A document that contains this information is known as a summary estimate of the cost of construction.

Conclusion

The article examined what the estimated cost of construction and major repairs is. As you can see, many factors and circumstances affect its size.