Para 2.4 — CONSULT_MANUAL

2.4 Estimating Costs, Setting the Budget, and Seeking Approval 1. Preparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked.

Manual for Procurement of Consultancy Services, Second Edition, 2025 a) Categories: Costs shall be divided into two broad categories:

(a) fee or remuneration (according to the type of contract used); and

(b) reimbursable costs. Depending on the nature of the assignment, cost estimates may be prepared either in local currency or with a combination of local plus foreign currencies. Cost estimate should provide for forecast of inflation during the period of assignment.

g) Estimated Resources: The cost estimate shall be based on the Procuring Entity's assessment of the resources needed to carry out the assignment:

i) Staff time ii) logistical support (City, National and International Travels/ Trips and durations), and iii) physical inputs (for example, vehicles, laboratory equipment) iv) Miscellaneous (Support services, contingencies, and Profit element, taxes, and duties) h) Rates: Costs are normally estimated using unit rates (staff remuneration rates, reimbursable expenses) and quantities (exceptionally some items may be estimated on the lump-sum basis or percentage basis – Contingencies and support services). Rates of payment should be identified (including applicable taxes if any) in local and foreign currency for Staff Time, Logistics Costs and Costs of various physical inputs/ support services. i) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months or staff-hours) required for carrying out the assignment taking into account the time required by each expert, his or her billing rate, and the related direct cost component. In general, staff remuneration rates include basic salary, social charges, overheads, fees or profit and allowances. It is useful to prepare a bar chart indicating the duration of each main activity (work schedule) and time to be spent by different members of the consultancy team (staffing schedule) distinguishing tasks to be carried out by foreign and local consultants. Due consideration should be given to the expected breakdown of a consultant’s time in the home office and client’s countries and away from home office allowance. j) Logistic Costs: Number of trips required should be estimated as required to carry out various activities. Travel costs may be included for city travel, National and International travel and stay. k) Physical Inputs Costs: Assessment of such costs would depend on the technical requirements of equipment. l) Miscellaneous costs: Support services may be taken as a percentage of staff costs. Contingencies and Profit elements are usually taken as a percentage of the total cost of the Consultancy. To this would be added the taxes and duties likely to be incurred by the consultants.

2. Although assignments vary in size, length, and nature, it is possible to make a cost estimate by breaking down the assignment’s activities into the following cost categories:

a) Professional and support staff; b) Travel, Hotel, and transport; c) Mobilisation and demobilisation; d) Office rent, Furniture/ Equipment, supplies, Utilities, IT equipment and communication; e) Assignment related surveys, training programmes; f) Translation, report printing;

Chapter 2: Need assessment and Procurement Planning g) Contingencies: miscellaneous, insurance, shipping; and h) Indirect local taxes and duties in connection with carrying out the services.

3. A mismatch between the cost estimate and the ToR is likely to mislead consultants on the desired scope, depth, and details of service required, and this could lead to serious problems during contract negotiations or during implementation of the assignment.