From the course: Accounting Foundations: Cost Estimating
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Engineering build-up approach
From the course: Accounting Foundations: Cost Estimating
Engineering build-up approach
- Construction projects provide great context for learning about this next estimating approach. Let's say you're a home builder, but let's also say that lately your cost comparisons for recent projects have been significantly exceeding estimates. We can't have this. So, what do we do? What you've been doing is using an approach like analogous estimating, you know, using similar projects and your experience to estimate project costs. This isn't working and it's a good time to look at a more accurate estimating approach, like the engineering build-up approach. This may be the official name, but really no one wants to say that all the time. So, you will hear a build-up estimate or bottom-up approach or some version of that, it's all basically the same thing. Simply build-up estimating gets to an overall cost estimate, adding the estimate values for smaller project or item components. This approach is the most accurate…
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