Cost estimation and budgets

At each phase of a project cost information is required to enable decisions to be taken. In the conceptual phase these estimates may be very approximate (e.g. + 35% accuracy), reflecting the degree of uncertainty regarding both reservoir development and surface options. As the project becomes better defined the accuracy of estimates should improve. 

Cost estimates can usually be broken into firm items, and items which are more difficult to assess because of associated uncertainties or novelty factor. For example, the construction of a pipeline might be a firm item but its installation may be weather dependent, so an allowance could be included to cover extra lay-barge charges if poor sea conditions are likely. 

Minimum risk estimates are sometimes used to quantify either maximum exposure in monetary terms or, in the case of an annual work plan containing multiple projects, to help determine the proportion of firm projects. Firm projects are those which have budget cover even if costs overrun. A minimum risk estimate is one with little or no probability of overrun, and can be used to reflect the risk associated with very complex or novel projects. 

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Development and management of cost estimates and budgets for maintenance projects and their distribution to various other operating departments. 

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