Estimated Cost of Construction in the USSR

outlays for the construction (expansion, renovation) of an enterprise, facility, or building or of particular parts, sequential units, or new complexes. Computations of outlays are based on estimates compiled from drafts and approved in an established sequence.

The estimated cost of construction and installation operations includes direct outlays, overhead, and planned accumulations. Direct outlays include the basic wage of the workers; expenditures for materials and goods, including the cost for supplying them to the warehouses at construction sites; and expenditures for operating construction machinery and mechanical devices. Overhead costs include outlays for maintaining the production process and management. Planned accumulations include the standard profit of construction organizations.

The indicators of estimated construction costs are used extensively in planning capital investments and construction and installation work, in financing construction, and in profit-and-loss accounting in construction organizations. They are used for these purposes because there is a specific system of price formation in construction, owing to the technical and economic characteristics of the construction process and output, the most important of which are the diversity of output, its local allocation, and the extent to which production depends on local conditions. Under these conditions, the estimated cost, which is the price of construction output, is determined on the basis of estimated norms and estimated prices approved for particular operations, structural elements, and regions.