CON 4003 CVE 4073/5073 Construction Cost Estimating Class #2: The Estimating Process Prof. Ralph V. Locurcio, PE

The Estimating Process-1 Decision to bid Decision to bid Form the estimating team Form the estimating team Estimate work plan Estimate work plan  Type of estimate  Procedures  Documentation Risk & contingency analysis Risk & contingency analysis Review & check the estimate Review & check the estimate Finalize the estimate Finalize the estimate

The Estimating Process

Estimate work plan Type of estimate required Deliverables by subcontractors Budget for the estimate Staffing Schedule Methodology Controls & reviews Presentation format & production

Prepare the estimate Conceptual estimate Conceptual estimate  Decision on units  Adjustments for time & location Detailed estimate Detailed estimate  Material take-off  Equipment & cycle time  Labor & productivity  Admin+overhead+logistics+profit

Basic estimating procedure Read the plans, specs & contract Read the plans, specs & contract Conduct a site investigation Conduct a site investigation Decide on construction method Decide on construction method Prepare schedule Prepare schedule Material quantity takeoffs Material quantity takeoffs Plan for equipment Plan for equipment Plan for subcontracts Plan for subcontracts Estimate costs of labor & materials Estimate costs of labor & materials Assess risks Assess risks Determine contingency Determine contingency

Basic estimating procedure

Conduct thorough site visit Physical characteristics Physical characteristics Sub-surface conditions Sub-surface conditions Site logistics for construction layout Site logistics for construction layout Condition of roads & bridges Condition of roads & bridges Storage space for lay-down Storage space for lay-down Security requirements Security requirements Operational requirements Operational requirements

Read the plans, specs & contract Contract terms & conditions Contract terms & conditions Payment & penalties Payment & penalties Scope and quantities Scope and quantities Complexity of construction Complexity of construction Completeness of plans Completeness of plans Quality of materials required Quality of materials required

Decide construction method Basic approach & teaming Basic approach & teaming Work breakdown structure Work breakdown structure Skills of work crews Skills of work crews Decision on work to be subcontracted Decision on work to be subcontracted Timing of individual activities Timing of individual activities Phasing of crews & subs on site Phasing of crews & subs on site Procurement of equipment Procurement of equipment Flow of materials & laydown Flow of materials & laydown Cash flow projection Cash flow projection

Conceptual work schedule Based on contract provisions Based on contract provisions Sequence of work Sequence of work Operational constraints Operational constraints Site constraints Site constraints Weather & safety factors Weather & safety factors Lead time for materials Lead time for materials Availability of subcontractors Availability of subcontractors

Material quantity takeoff Systematic breakdown of units Systematic breakdown of units Study plans & specs Study plans & specs Bid instructions, format & alternates Bid instructions, format & alternates Follow sequence of construction Follow sequence of construction Categorize materials & labor Categorize materials & labor Check for duplicates & omissions Check for duplicates & omissions Document all work Document all work Review & check for errors Review & check for errors

Calculate direct costs Materials, labor, equipment Materials, labor, equipment Subcontractor bids Subcontractor bids Contact suppliers Contact suppliers Market factors apply Market factors apply Establish and update cost data base Establish and update cost data base

Calculate indirect costs Mobilization Mobilization Field office Field office Insurance Insurance Bonds Bonds Taxes & permits Taxes & permits Cleanup Cleanup Demobilization Demobilization

Conduct risk analysis Complexity of plans & specs Complexity of plans & specs Terms of contract & penalties Terms of contract & penalties Experience with owner Experience with owner Timing of project Timing of project Market factors for labor & materials Market factors for labor & materials Weather & safety Weather & safety Other uncertainties effecting execution Other uncertainties effecting execution Probability of occurrence of each Probability of occurrence of each

Determine contingency Percentage of base estimate Percentage of base estimate Determine high cost risk factors Determine high cost risk factors Expected net risk based on probability Expected net risk based on probability Aggregate total project risk Aggregate total project risk

The Estimating Process

That’s all for today… Slides are on my web site Slides are on my web site My web site: My web site: