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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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.

9. 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

10. 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

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

12. 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

13. 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

15. 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

16. 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

17. 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”)