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Total Estimated Cost
Total estimated cost refers to the comprehensive calculation of all anticipated expenses associated with a procurement, including initial purchase price, maintenance, and other financial considerations, crucial for budgeting.
When you're preparing a procurement, the total estimated cost isn't just the sticker price. It's the full financial picture—what you'll pay upfront, what you'll spend maintaining or operating the purchase, and any other expenses that come with it over its entire life. Get this wrong, and you might trigger different approval thresholds or trade agreement obligations than you planned for.
How It Works
According to Supply Manual Chapter 3.60, your estimated contract value must capture all anticipated costs over the entire duration of the contract. That includes options you might exercise, potential amendments, and related services like maintenance or training. You need to calculate this value at the tender notice publication date, even if you won't actually spend all that money right away.
The calculation matters because it determines which rules apply to your procurement. For most federal departments, you're looking at threshold values of $25,000 for goods, $100,000 for services (excluding construction), and $250,000 for construction under trade agreements like the Canadian Free Trade Agreement. Cross those lines and suddenly you're dealing with different posting requirements, additional obligations, and more complex compliance considerations.
In practice, Treasury Board expects different levels of rigor depending on where you are in the process. Their Guide to Assessing Cost Estimates outlines three categories: rough order of magnitude (ROM) for early planning, indicative estimates when you're developing options, and substantive estimates for final Treasury Board submissions. Each level requires progressively more detailed analysis—cost elements, inflation assumptions, internal services, and life-cycle expenses all need consideration as you move from ROM to substantive.
Key Considerations
Don't forget the options: If your contract includes optional years or additional units, you must include those in your initial estimate—even if you're not certain you'll exercise them. The maximum possible value is what counts.
Life-cycle costs add up fast: Maintenance, upgrades, disposal costs—these can dwarf your initial purchase price, especially for complex systems or IT infrastructure. A $50,000 server purchase might carry $200,000 in support costs over five years. The Guide to Costing specifically requires you to consider these elements for credible costing information.
Inflation adjustments matter: The CFTA requires biennial adjustments using the Industrial Product Price Index formula. What fell under a threshold in 2023 might exceed it in 2025.
Related services count: Training, installation, warranties, and support services all roll into your total. You can't split them out to avoid threshold requirements—procurement officers see right through that approach.
Related Terms
Contract Value, Trade Agreement Thresholds, Procurement Thresholds, Life-Cycle Costing, Treasury Board Submission
Sources
Bottom line: invest time upfront to get your estimate right. An accurate total estimated cost keeps you compliant and helps you avoid surprises when approvals or trade agreement obligations kick in unexpectedly.
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