Budget authorization

The accuracy of a fixed capital estimate tends to be a function of the design effort involved. As the project definition is refined, the estimates evolve from the various preliminary phases, ie, order of magnitude, predesign, factor estimates, etc, into the more detailed estimates used for budget authorization, project control, and contracts. At the same time, the uncertainty in the estimate decreases from 50% to as Htfle as 5%. 

Preliminary estimate (budget authorization estimate). More details about the process and equipment, e.g., design of major plant items, are required. The accnracy is probably -20 to -1-25 percent. 

Preliminary estimate (budget authorization estimate scope estimate) based on sufficient data to permit the estimate to be budgeted probable accuracy of estimate within +20 percent. 

Freliminaru estimate (budget-authorization estimate). Requires more detailed information than study estimate probable error up to 20 percent. 

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When capital cost estimates of a definitive investment are required to obtain budget authorization, competitive quotes from vendors have to be requested, as these quotes are the most reliable estimates. 

A scope or budget authorization, the next level of economic evaluation, requires a more defined process definition, detailed process flow sheets, and prefinal equipment design (discussed in a later section). The information required is usually obtained fiom pilot plant, marketing, and other studies. The scope authorization estimate could cost upwards of 80,000 for a 5 million facility with a probable error exceeding 20%. 

BANT stands for Budget, Authority, Need, and Time, and is a more advanced lead qualification practice than demographics and firmographics. BANT takes into consideration the ability to secure facts about the prospect before moving forward, and therefore these are questions often asked by the sales rep to further qualify the lead. 

No Budget, Authority, Need, and Time (BANl) The lead has no budget, isn t the right person to speak with, doesn t have a need, or the timing doesn t quite work out. 

BANT The lead has the budget, authority, need, and the right timeline to make the right decision. 

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