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To come up with these estimates, several estimation techniques are often used. However, you should note that just like other cost estimates, the definitive estimate also changes over time, provided that there is a change in base assumptions or risk comes up. One can use the definitive estimate to create tenders, cost baselines, and bids. It is created using deterministic estimating techniques to give an accurate and reliable estimation of costs. This usually comes when the project’s scope and tasks are almost fully defined. Project managers can use this estimate to control the project expenditure.
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This comes after the objectives and deliverables of the project have been defined. Substantive estimates are crafted once the project design has been reasonably finalized to depict an accurate cost estimate based on unit costs. This can be used as a basis for project financing, and some stakeholders may use it to authorize project budgets. It takes into account the detailed scope information to come up with unit costs. The preliminary cost estimate is drafted when a project is halfway defined. It can either be developed using stochastic or parametric techniques and has a similar purpose as the magnitude estimate order. The intermediate cost estimate is created once the project is defined to a limited extent. This estimate only comes in for high-level decision-making to determine financially feasible projects. The range of costs lies between -25% to +755 of the actual project costs. It is, therefore, an extremely rough cost estimate based on expert judgment and similar past projects. This is usually prepared before the project is defined. Given the ongoing nature of cost estimation, there are different cost estimates that we ought to look at.