List the essential elements of the project cost?
A proper determination of the cost of project is important for determining the viability and profitability of the project. The business normally approaches various financial institutions for the financial aids.
Following are some of the essential elements of the project cost:
Land and site development: The purchase price of land, registration and legal expenses, etc, falls under this category. Apart from this the cost of leveling the land, laying interest, also included.
Buildings and Civil Works: The cost of primary buildings for carrying on the activity and auxiliary buildings providing-support service falls under this. category.
Plant and Machinery: It includes price of machinery, cost of installation and provision for machine spare parts.
Technical Know-how fees: The fees of engineers and other technical professionals fall under this category. Any expenses on training of staff from foreign technicians are also included.
Miscellaneous Fixed Assets: It includes the following items: Furniture, cars and trucks, power equipment’s, pollution control gadgets, fire extinguishers, air conditioners, etc.
Preliminary and capital issue expenses: It includes items like Interest on Terms. Loans during construction period.
Provision for contingencies: It is related with the factors like increase in the price of equipment, escalation clauses in contracts for Civil Works, increase in taxes, etc.