Engineering, Project Management, Supervision:

Commonly, this head is lost sight of in the existing practice of estimate preparation. Even if the design and drawings/surveying works are being carried out departmentally, the business model calls for booking them on a few notional bases in the project expenses head. The costs towards hiring of professional consultants, purchasing/hiring of construction plant and equipment like earthmoving equipment and etc., are also involved here. Additionally, the costs towards enabling work like bringing construction power, setting-up of stores or guest houses and etc., are also to be accounted for here.

The costs of initial fill of oil wherever it is to be completed through the promoters are also accounted here. In addition, the attendant tax provisions now applicable to every service @ 10.2% of value of such services and a pass by to the promoter should also be accounted for although undertaking the cost estimation exercise. The project supervision charges either through consultants or the promoter's own personnel should be accounted for under this project head.

This head also involves the costs towards establishment expenses involving salary and wages of project personnel, travelling, postage, telephone expenses etc. during the execution period. In case, estimating cost of individual items as described above is not possible, a notional provision to the tune of 7-8% as erected cost must be provided towards this head. In future, for big green field projects, this provision must undergo an upward revision to the range of 10-12%.