Estimating Project Costs (Refer to Chapter 9 of the textbook.)

What is an estimate? Probable cost of a future work formal and exact process or a quick and imprecise process Involves calculating the cost of work on the basis of probabilities Use of Mensuration applied geometry which gives rules for finding the length of lines, the areas of surfaces, or the volumes of solids, from certain simple data of lines and angles Arithmetic Trigonometry Algebra Two primary parts Measurement Pricing

What is an estimate? More valid data the contractor has available, better she/he will be able to estimate the probabilities of costs from various factors: Site, location, and accessibility Soil and subsurface conditions Climatic conditions Wage agreements Strikes and lockouts Availability of money Political and economic climates

Construction Costs Usually classified under: Material costs Labor costs Plant and equipment costs Overhead costs and profit Data on all these costs are required to make an estimate and to calculate costs in an estimate: Cost = Quantity * Unit price

Construction Costs Measurement and prices cannot be viewed separately Description of item: Ready-mixed concrete (3000 psi, ¾” maximum size aggregate) placed by crane in roof slabs: Material: Concrete, as specified Quantity Unit Price Cost 200 CY $50 per CY $10,000 Labor: Place concrete $16 per CY $3,200 Equipment 30 hr $50 per hr $1,500 Material, labor, and equipment $73.50 per CY $14,700 Measurement and prices cannot be viewed separately Each is a function of the other Unit price of labor = Total cost of labor/Number of units

Construction Costs The exact unit price of labor or equipment will not be known to the contractor until the item has been completed. Unit price is an average price per unit of measurement. vary with each job absolutely identical number for two different jobs is unlikely because a large numbers of variable involved

Contractor’s Estimate As accurate as possible for bidding If accepted, the stipulated sum in the bid becomes contract sum The estimate may be viewed in four parts: Cost of work to be done by contractor’s own forces Cost of work to be done by subcontractors Cost of general requirements for all works provided by the contractor Overhead and profit

Contractor’s Estimate A contractor receives sub-bids from subcontractors and combines the most favorable sub-bids Adds estimated allowances for overhead and profit Ascertain that none of the parts are duplicated More than making a bid; must also be prepared with objectives of proper purchasing, planning, controlling, and cost accounting in mind.

Contractor’s Estimate Quantity takeoff Foundation of the estimate CSI format Calculate every item of the project Material cost Most straightforward to determine Verify Specification Price Stock Payment terms to vendor/supplier

Contractor’s Estimate Labor costs Union or non-union/merit shop If union Expiration dates of union agreements Amount of overtime anticipated Availability of skilled labor in the area Expected efficiency rate Weather conditions Specific conditions of the work (i.e. scaffolds, cranes, etc.) Duration and frequency of overtime

Contractor’s Estimate Equipment costs Cost of equipment Owning Renting Storage Insurance License Cost of operation Overhead and profit

Subcontractor’s Estimate Subcontractor is responsible to the contractor in the same way as the contractor is responsible to the owner Guidelines for contractor’s estimate are generally applicable to subcontractor’s estimate Bid shopping the practice of a general contractor who, before the award of the prime contract, discloses to interested subcontractors the current low sub-bids on certain subcontracts in an effort to obtain lower sub-bids Establishment of bid depositories to prevent bid shopping Submitting sub-bids in an independent place designated by bidding authority Bidders collect the sub-bids from bid depositories

Designer’s Estimate Preliminary estimate completed before bidding Frequently done by designer’s consultants Enables the designer to design the building within the financial limits set by the owner Techniques used Cost per place (per room, per bed, per seat, per student, etc.) Rough Order of Magnitude (ROM) Cost per cubic foot ( of building volume) Cost per square foot (of building area) Cost per story-enclosure (areas of all floor and roof decks and of all enclosing walls, with applied factors for building height, in stories) Cost per element Analyzes buildings into basic parts such as exterior walls, roof decks, etc. Assemblies estimate using CSI format Cost per approximate quantities

Owner’s Estimate Estimate made for feasibility study Often done without preliminary design, only from a list of space requirements Based on; Historical data Some assumptions on form and nature of the building

Estimator Must have extensive knowledge of Should be capable of Construction Materials and methods Construction practices and contracts Mensuration, geometry, mathematics, construction economics Should be capable of Reading and writing bidding documents Developing construction details Communicating both graphically and orally

Estimate Considerations Project Size Economy of scale Size increases cost decreases Cost increases with size at a decreasing rate Project Quality Quality increases, cost increases As the quality cost increases, the value of increased quality to owner increases at a decreasing rate Must be precisely quantified per individual unit Location Variation in cost of labor, equipment, and materials Variation in climatic, economic, geological, political conditions Adjustment of costs using location index Time Time when construction will start Adjustment of costs Use time index (or both time and location indices) (Building cost at location “A”/Time and location index for “A”) = (Building cost at location “B”/Time and location index for “B”)