Methods of Estimation MCQ with answer and solution

Concept

Purpose and applications of approximate estimates

Formula

NONE

Step-by-step solution

1. Preliminary or approximate estimates are formulated to determine the rough financial commitment of a project without full quantities take-off. 2. Standard estimating practice adopts approximate estimates to establish project baseline values for administrative sanction, loan collateral, property tax schedules, and insurance premiums. 3. Detailed estimates are prepared later for actual contracting and execution. 4. Hence, approximate estimate is used for fixing project value for insurance and tax schedules. Answer: D

Explanation

An approximate estimate (preliminary or rough estimate) is prepared in the early planning stages before detailed drawings are finalized. Beyond providing initial cost feasibility and securing administrative approval, approximate estimates are standardly used by public and private agencies for fixing asset valuation, insurance coverage, and local property tax schedules.

Why the other options are wrong

A) A supplementary estimate is an additional detailed estimate prepared when further works are required during execution. B) A detailed estimate provides accurate itemized quantities and costs for contracting, not quick statutory tax/insurance valuation. C) A revised estimate is prepared when original sanctioned estimates are exceeded by over 5%.

Shortcut

Preliminary valuation for insurance, taxes, and approvals = Approximate estimate.

Common mistake

Selecting detailed estimate assuming official insurance or taxation bodies require item-by-item BOQ rather than standard preliminary capital valuation.