What is Gross Development Cost (GDC)?

Published by Thomas Herold in Accounting, Corporate Finance, Investments

'Gross Development Cost (GDC)' is explained in detail and with examples in the Corporate Finance edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Gross Development Cost (GDC) refers to the aggregate costs of a given company project. It could also be called the sum of all means of finance which a company employs on a particular project. This is similarly the total costs which a firm incurs from the conception of to the final implementation of a certain project. Any costs that occur after the project’s completion will be treated as operational expenses. Some analysts refer to the GDC as the expenses associated with developing either improved or new products.

Two main project cost estimate categories exist in the world of business. These are project planning estimates and project design estimates. The former will be deployed in justifying and receiving approval for a given project, analyzing alternative projects, programming the sequence of project events, and receiving the final project go ahead. The latter sum up the projected project costs pertaining to sourced materials and contracted work.

One thing about such cost estimates is that they never become complete until a given project is final. In fact, insightful companies will constantly review their estimates in an effort to ensure they remain current and accurate as possible. Project engineers carry the burden for making sure the projected cost stays updated all during the project development process. At the same time, the responsible project manager carries the responsibility for both reviewing and ultimately signing off on every estimate for the costs of the project.

Current project cost estimates prove to be the ones which are the most current estimates on file in the design and planning phases. Alternatively, project planning cost estimates will be the ones compiled before a project becomes fully approved. Project planning costs estimates can be categorized according to several different breakdowns. These include project feasibility, project initiation, draft estimate project report, and project report.

Projects rarely begin without a company coming up with a project initiation cost estimate. This is an expanded version of the estimates on project feasibility in greater detail. This estimate is the one that ultimately underlies the program project costs. This is why a highly reliable estimate is critical at this juncture. It proves to be the initial benchmark against any other and future estimates.

Next in the natural progression of a potential project comes the draft project report. This estimate utilizes the identical format to the project initiation cost estimates but naturally comes with far greater detail. In such an estimate, every competing project alternative option has to be compiled with current data derived from units actually involved with the project in question. This includes elements like structure design, materials, labor unit costs, hydraulics, right of way, etc.

The next project estimate in the progression of a project will be the Project Report Cost Estimate. Once again, this stays with the identical format as with the previous project planning cost estimates. The estimate for project costs should be more conclusive at this stage. Finally, once a project is fully approved will come the project design cost estimates.

The Project Manager will update such estimates during the project development. The Project Design Cost estimates can be labeled as either final or preliminary. Such design cost estimates concentrate on the project’s construction costs. These estimates should be the most detailed, up to date, and accurate of the various planning cost estimates. They should cover everything from upfront project evaluation to construction design data and costs as available. Such data permits the project manager to develop the most detailed cost estimate possible in the ongoing progress of the project in question.

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The term 'Gross Development Cost (GDC)' is included in the Corporate Finance edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.