1. Define the project before estimating costs
List deliverables, quantities, specifications, location, schedule and exclusions. Construction budgets may need design, permits and site preparation; service projects require staffing, time and technical inputs.
Separate investment costs, ongoing operating expenses and working capital. Avoid including one amount twice, and record the owner and expected payment date for each cost.
2. Build a detailed cost breakdown
Create categories that match the project: studies, design, facilities, equipment, shipping, installation, labour, professional fees, licences, training and launch. Include indirect costs where relevant.
Record the item, quantity, unit price, source, date, supplier and evidence status. Verify whether turnkey prices already include installation or delivery before adding those items elsewhere.
3. Choose an appropriate estimation method
Unit-cost methods multiply quantities by hourly, area or equipment rates. Comparable-project methods adjust previous costs for scale, specification, date and location. Bottom-up methods sum individual components when plans are advanced.
Early estimates may have high uncertainty even when presented to the nearest dollar. Canada’s 2023 Treasury Board costing guide offers a useful seven-step process; its principles are general guidance, not universal requirements for grant applicants.
Illustrative example
200 training hours at $125 per hour produce a base cost of $25,000 before tax and extras.
4. Request comparable supplier quotations
Provide identical written requirements for scope, quantity, quality, delivery, warranty and payment terms. Seek multiple offers when feasible while following the procurement policies that apply to the organization.
Compare exclusions, delivery, taxes, currency, quote expiry, payment milestones and supplier capacity rather than headline price alone. Québec consumer guidance on home renovation illustrates useful written-quote details but does not replace commercial procurement rules.
5. Separate estimates, quotations, commitments and payments
A published price or old project is a benchmark, not a binding offer. A dated quotation states a proposed price under conditions; an accepted purchase order or signed contract documents an obligation for a defined scope.
Invoices show amounts billed, while payment proofs show amounts settled. Evidence of delivery may be separately needed. These HorizonL teaching categories are not official legal classifications and do not determine grant eligibility.
| Teaching level | Typical document | Meaning |
|---|---|---|
| Estimated | Price listing or comparable project | Indicative benchmark |
| Documented | Dated supplier quote | Conditional offered price |
| Committed | Accepted contract or order | Defined contractual obligation |
| Invoiced or paid | Invoice and separate payment proof | Billed and/or settled amount |
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Explore HorizonL6. Assess risks before setting contingencies
Identify quantity errors, material inflation, scope changes, construction conditions, delivery delays and exchange-rate risks. Consider probability, impact and available mitigation before choosing a reserve.
A blanket 10% contingency is not a universal rule. The Treasury Board’s 2025 cost-estimate classifications concern covered federal projects and do not apply to transfer-payment-funded initiatives; their concepts can still help explain estimate maturity.
Illustrative example
A fictional 8% reserve on $500,000 of exposed costs equals $40,000. It is not a universal required percentage.
7. Distinguish taxes, net costs and eligible spending
Show sales taxes separately. Depending on registration and activity, GST and QST may be recoverable, but the cash must sometimes be advanced before recovery. Different conditions may apply to non-profits, public service bodies and municipalities.
Grant eligibility is a separate question governed by program rules, dates, approval and evidence. A cost is not automatically eligible because it has been paid. Refer to Revenu Québec and the particular funder.
8. Example: a fictional $500,000 project budget
A small business modernization project uses supplier-backed equipment costs, estimated renovations, professional services under contract and an opening working-capital requirement. These items are not all confirmed to the same degree.
Before funding or purchasing, verify the scope, quote validity, tax treatment and payment dates. The $30,000 working-capital amount is not automatically a grant-eligible cost.
| Fictional budget item | Amount | Evidence |
|---|---|---|
| Equipment | $220,000 | Supplier quote |
| Renovations | $130,000 | Indicative estimate |
| Professional services | $35,000 | Contract |
| Training | $20,000 | Offered price |
| Launch | $25,000 | Itemized estimate |
| Contingency | $40,000 | Risk assessment |
| Working capital | $30,000 | Cash forecast |
| Total | $500,000 | Mixed evidence levels |
9. Document costs for a financing application
Link each item to a quotation, contract or cost methodology showing supplier, date, scope, exclusions, taxes and level of confirmation. Keep old versions and record what remains to be confirmed.
Align payments with expected loan or contribution disbursements. Approved funding reimbursed later can still require interim cash. Requested support is not confirmed financing.
10. Update and reconcile costs as the project progresses
Track original budget, signed commitments, invoices, amounts paid, estimated cost to complete and updated final cost. Record variations and obtain required approvals.
Keep a dated history when quotations expire or scope changes. Reconcile revised costs with the cash forecast and funding plan, using HorizonL’s forecasting and business funding guides for next steps.
Review checklist
Before treating your file as complete, review these questions.
- Project scope and exclusions specified.
- Costs broken down without duplicates.
- Each estimate has a method and dated source.
- Supplier quotes are compared on equivalent terms.
- Estimates, quotations and contractual commitments distinguished.
- Invoices and payment evidence tracked separately.
- Taxes and funding eligibility checked separately.
- Contingency supported by project risks.
- Payment and funding timelines reconciled.
- Cost revisions and supporting files retained.
Frequently asked questions
Does a quotation guarantee the final project cost?+
No. It typically documents a conditional offered price for a scope and validity period. Accepted contracts are stronger evidence but may still be amended.
Are three quotations always required?+
No universal rule applies. Procurement policies and funding conditions vary, although comparison is often valuable.
Is a 10% contingency mandatory?+
No. Reserves should follow the project’s risks and the maturity of its estimates.
Is a paid expense automatically grant-eligible?+
No. Program rules on dates, categories, approvals and supporting evidence still apply.
Official sources and references
Sources reviewed November 4, 2026. Check the official versions and reference dates before making decisions.
- Treasury Board Secretariat (French) — Costing guide
- Treasury Board Secretariat (French) — Assessing cost estimates
- Québec consumer protection office (French) — Renovation quotations
- Revenu Québec (French) — Input tax credits and refunds
- BDC (French) — Working-capital planning
Fictional examples for educational purposes. This guide does not replace qualified accounting, legal, financing or business valuation advice.