Estimating Process

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Estimating Process
ARE 413 CONSTRUCTION MANAGEMENT By MOHAMMED
JALALUDDIN LECTURER CONSTRUCTION ENGINEERING
MANAGEMENT DEPT Handout 17
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Presentation Outline

• Estimating Process
• What is an Estimate Definition of Estimation
• Why Construction Estimating ?
• Types of Construction Costs
• Direct Costs
• Indirect Costs
• Cost Estimating Process
• Quantity Take-off (QTO)
• Pricing
• Steps in developing an estimate
• Types of Estimation
• Conceptual Estimating
• Preliminary Estimating
• Engineer Estimate
• Bid Estimate

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Objectives of Class

• To define Construction Estimation and purpose .
• To understand different types Construction Costs
• To understand steps in developing estimate

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Source AACE
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Source AACE
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Source AACE
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Estimating
An estimate is the Prediction of future
construction costs. The process of looking into
the future and predicting project cost and
resource requirements The process of determining
the anticipated cost of materials, labor, and
equipment of a proposed project.
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Types of Construction Costs

• Labor
• Materials
• Equipment
• Subcontract
• Overhead Profit

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Labor Costs

• Labor Costs
• To price labor
• Estimate the work hours required to do a unit of
  work of all trades involved. (i.e.Carpenters,
  labors, etc.)
• Multiply hours required by wages benefits
  Total cost of labor per unit of work
• Factors affecting labor
• Productivity Availability of qualified labor
• Unions - wages rules

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Materials

• Supplies purchased by the contractor and
  incorporated into the finished construction
  project
• (e.g., lumber, windows, and concrete).

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Equipment costs

• Cost of equipment including maintenance, taxes
  and insurance on the equipment, maintenance,
  deprecation, and allowance for repairs.
• Operation costs - cost per hour
• Rental cost
• Depreciation maintenance

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OVERHEAD COSTS

• Costs that cannot be attributed to any particular
  job "Office expenses"
• Management and Staff
• Salaries, fringe benefits
• Transportation
• Business offices
• Rent
• Furniture and depreciation
• Office supplies - depreciation
• Communications
• Telephone
• Faxes
• Advertising

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• Direct Costs of all the resources
• Labor L
• Equipment E
• Material M

• Indirect Costs
• Bond Premiums
• Insurance premiums
• Fees for licenses and permits
• Services such as water, electricity,
• telephone, maintaining site office
• Home office overheads allocation

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What Are Estimates Used For?

• Bid or Proposal for a construction project
• Budgets for construction and development
• Feasibility studies of proposed developments
• Preliminary Cost during design development
• Selection of alternative design proposals (based
  on costs and economics)

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Construction Estimation Process
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Steps in developing an estimate

• Break the project into cost centers
• Estimate the quantities required for cost centers
  that represent physical end items (Quantity
  Take-off)
• Price out the measured quantities
• Calculate the total price for each cost center by
  multiplying the required quantity by the unit
  price

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Work Package

• Sub-division of the project that is used both for
  cost control and time control
• Work Packages results in WBS (Work Breakdown
  Structure)
• A work Package may contain various individual
  work tasks

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Quantity Take-off

• Review Drawings and Specifications
• Measure quantities of work to be performed in
  appropriate units
• Estimators have their own methods
• There are guides available as to how quantities
  should be measured
• Minimize errors

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Errors in Quantity Take-off

• Arithmetic
• Errors of omission
• Poor reference
• Unrealistic waste or loss factors

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Good Practices in QTO

• Review Drawing and Specification
• Identify the method of Taking-off
• By Trade
• By Construction
• By Work Package
• Prepare a checklist of QTO and check with a
  standard checklist
• Prepare a worksheet to enter dimension against
  each work item

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Good Practices in QTO (Cont.)

• Identity the work involved in each task and have
  notes against the task
• Identify the material required for each task
• Be clear, concise so that other people can check
  the work if required.
• Use color markers to highlight items already
  taken-off
• Calculate the quantities (arithmetic) and check
  again.

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Pricing (Cost Determination)

• Refer prices from historical data, vendor
  quotations, suppliers catalogs, pricing books,
  in-house databases, experience.
• Pricing can be Unit price basis or lump sum basis
• Refer or prepare an analysis of production rates

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Next Class Pricing