Terms
Owners and project managers use estimate, baseline and budget as if they were one number. They are not. An estimate is a projection, a baseline is the version someone approved as the starting point, and the budget is the authorized amount you then track, with approved changes added on top. This page defines each term and shows where it sits in Fidrel, so the number in the cost report has a clear source.
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The cost consultant’s estimate, the contractor’s price and the owner’s spreadsheet each carry a total, and each gets called the budget in a meeting. When a variance is reported, nobody agrees which number it is measured against.
When change orders are folded straight into one budget figure, the original amount disappears. The owner can see where the project stands but not how far it has moved from what was approved.
An updated view of the final cost is useful, but it is an opinion about the future. If it replaces the approved amount, nothing remains to measure the overrun against.
An estimate is a projection of what the work will cost at one point in the design, and a project usually has several. The baseline is the single estimate the owner approves as the starting point, which is why Fidrel locks it. The budget is the baseline carried into cost control: the original budget stays fixed, and the current budget is the original plus approved changes. A forecast is an assessment of the cost at completion; in Fidrel it is either a forecast estimate or the estimate at completion that cost tracking shows beside the current budget.
Cost estimation
Say the approved baseline estimate totals 10,000,000 dollars. That is the original budget, and it does not change. Two approved change orders add 150,000 dollars, so the current budget is 10,150,000. Invoices and commitments are measured against the current budget, while the original figure still answers the question of how far the project has moved from what was approved. These numbers are only an illustration of the arithmetic.
Step 1
An estimate is built in groups and line items with quantity and unit price or a fixed amount, and it can be a baseline, alternate, working or forecast estimate. It is a draft: nothing is tracked against it, and the screen says it is not the approved project budget.
Step 2
Submit the estimate for review and approve it as the baseline estimate. It is locked, it becomes the original budget, and every priced line item becomes a budget item. There is one approved baseline estimate at a time.
Step 3
Approved change orders, revisions and other budget changes are totaled separately and added to the original to give the current budget. A change order linked to a budget item stays an expected change until an administrator approves it.
Step 4
Cost tracking shows committed and invoiced amounts against each line item, with the estimate at completion and the variance. A revision can later replace the baseline, and you choose whether approved changes stay on top of it or are folded in.
Contingency is part of the budget. In Project finances, a contingency amount can be assigned, released and consumed, and consuming it moves budget to the receiving item without increasing the project total. When the design changes enough to need a new estimate, you create a revision of the baseline, and the history shows who approved it, when, and the budget before and after.
Fidrel does not tell you how much contingency or reserve to hold, or when to release it. Fidrel does not grade an estimate by accuracy; the phases of a project are names you choose. A forecast estimate cannot be approved as the budget, and only one baseline estimate is approved at a time.
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Read moreAn estimate is a projection of cost; a project can have several. The budget is the amount authorized for the project. In Fidrel the budget starts as the one estimate approved as the baseline, then changes only through approved changes.
The baseline estimate becomes the original budget when it is approved. The current budget is the original plus approved change orders, revisions and other changes, so the two numbers separate as the project moves.
Not directly. A forecast estimate cannot be approved as it is. Change its type to baseline estimate first, and then approve it, which makes it the new baseline.
The revision replaces the baseline after approval. You choose whether approved changes stay on top of the new estimate or are already included in it, and the history keeps the budget before and after.
Contingency is part of the budget. It can be assigned, released and consumed in Project finances, and consuming it transfers budget to the receiving item without raising the project total.
