What is the difference between static investment and dynamic investment?

Static investment is the instantaneous value of construction project investment calculated according to the price of building elements in a reference year and month. But it includes the increase or decrease of project cost caused by engineering quantity error. Static investment includes: construction and installation costs, equipment engineering costs, equipment purchase costs, other engineering construction costs, basic reserve costs, etc. Dynamic investment refers to the sum of the estimated investment demand for completing the construction of a project. It includes not only the contents of static investment, but also the loan interest during the construction period, investment direction adjustment tax, price increase reserve and so on. Dynamic investment conforms to the requirements of market price operation mechanism, which makes the planning, estimation and control of investment more realistic. Although the contents of static investment and dynamic investment are different, they are closely related. Dynamic investment includes static investment, which is an important part of dynamic investment and the calculation basis of dynamic investment. The appearance of these two concepts is directly related to the calculation of project cost.

According to the national laws and regulations, industry system and market conditions, the project investment calculated according to the price level of a certain period (usually a certain year or a certain month) is collected by standardized pricing methods. The estimated engineering quantity of static investment refers to the number of construction and installation projects, equipment, equipment and spare parts designed and calculated according to the engineering quality, environment and safety standards formulated by the state and industry. The estimated price of static investment is the product of the price of labor, materials, equipment and taxes at the calculation point (calculation time) and the consumption of labor, material resources and machinery per unit project quantity. The estimated expenses include construction, scientific research, design, supervision, consultation, immigration, land acquisition, environmental protection, taxation and other expenses required to complete the above projects. Static investment calculation does not consider price changes and the time value of construction funds.

Static investment includes: prophase expenses of construction projects, construction and installation expenses, equipment purchase expenses, other construction expenses, and basic reserve expenses (project expenditures that are difficult to be included in the budget preparation stage due to cost changes caused by differences in engineering quantities). Static investment has a certain time, so it should be calculated according to a certain time, that is, the expected base period. Especially for projects with a far difference between the estimated time and the start-up time, it is necessary to take the year before the start-up as the benchmark year and adjust the static investment according to the price index in recent years, otherwise it will lose its benchmark role and affect the accuracy of investment estimation.