Each cost estimate is based on a costing variant:

The costing variant contains control parameters and settings for costing, such as which prices are used to cost materials and activities.

The control parameters in the costing variant and the settings you need to make will vary depending on whether you are creating a material cost estimate or a base object cost estimate.

Each costing variant specifies a valuation variant and a costing type.

For more information on the Customizing parameters, see:

Preparation for Material Costing

Preparation for Base Object Costing