Budget and cost are two important concepts in construction projects. Although they both involve the cost of the project, they have some differences in concept and application.
Budget refers to the pre-estimation and calculation of the materials, project quantities, labor costs, equipment costs, management fees and other expenses required for the project based on the engineering design plan and construction plan before the project is constructed. In order to grasp the total cost and funding requirements of project construction in advance, it can provide a basis for project financing and management. The main function of the budget is to guide project design, comprehensively grasp project construction costs, and provide reference for project financing and fund management.
The cost refers to the actual total cost of the completed project, including material fees, labor costs, equipment fees, management fees, taxes and other expenses. It is the final economic result in the project construction process. . The main function of the cost is to provide project cost information to the owner and provide a basis for the settlement and final accounts of the project. It is also one of the comprehensive evaluation standards for project quality and management.
Therefore, the main difference between budget and cost is: budget is a pre-estimation and calculation of project costs before project construction, aiming to provide a basis for project financing and management; while cost is the completed project The actual total cost required is intended to provide a basis for settlement and final accounts of the project.
In addition, budgets and costs are prepared differently. Budget preparation is mainly based on the engineering design plan and construction plan, and is calculated using methods such as the bill of quantities method, quota method, and market survey method; while the cost preparation is based on statistics, accounting, and analysis of the actual expenses incurred by the project.
In short, budget and cost both play an important role in the engineering construction process, but there are some differences in their concepts and applications. The main function of the budget is to provide the basis for the financing and management of the project, and the main function of the cost is to provide the basis for the settlement and final accounts of the project.