1. CONTENTS Accuracy of Construction Cost Estimating 00 Abstract 02 - 03
01 Importance of Accuracy
In Cost Estimating 04
02 Estimating Techniques 05
03 Range Estimating
04 Composition of Project Price 08
05 Types of Estimates 09
06 Accuracy by Error
Prevention 10
University of Illinois,
Urbana – Champaign. Fall ’09.
CEE 422 Construction,
Cost Analysis.
Accuracy of Construction Cost Estimating
Prof. Ibrahim Odeh
Ayuss S. Kumar

2. 00 Abstract
Accuracy in Cost Estimating helps the Architect – needs to make informed decisions to the owner regarding:
Materials
Phases of Construction
Building Systems
Scale of Project
Space Planning
Feasibility
Built up Areas
Ayuss S. Kumar 02

3. Cost Estimating Accuracy depends on :
00 Abstract
Cost Estimating Accuracy depends on :
Scope of Project
Reliability on Info.
Labor Unions
Government Rules & Taxes
Historical Data
Time Factor
Site & Weather Conditions
Ayuss S. Kumar 03

4. Investment to revenue generated – financing.
01 Importance of Accuracy in Cost Estimating
Investment to revenue generated – financing.
Helps keep the project on budget during execution.
Control on cash flow.
Helps justify progress payment to the contractor.
Updates historical data base for future project references.
Arbitration – unresolved claims.
Ayuss S. Kumar 04

5. 4 Main types of Estimating Techniques
Project Comparison or Parametric Cost Estimating
Area & Volume Estimating
Assembly & System Estimating
Unit Price & Scheduling Estimate
15-20% Accuracy
5-15% Accuracy
10% Accuracy
2 - 5% Accuracy
Ayuss S. Kumar
Fig.1 - Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe. 05

6. Contingency helps increase accuracy of estimating.
03 Range Estimating
Assessment of how far a project’s final cost may vary (+/- %) from the single point value that represents the estimate.
Estimate - range of cost outcomes - Represented as a probability distribution curve.
Fig.2 & 3- Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe.
Contingency helps increase accuracy of estimating.
Depends on where the contingency is placed about the point estimate.
Ayuss S. Kumar 06

7. Estimate accuracy tends to improve with project definition.
03 Range Estimating
Estimate accuracy tends to improve with project definition.
Class 5 – High Range +30% to 100%
Low range -20% to -50%
Class 4 – High Range +20% to 50%
Low range -15% to -30%
Class 3 – High Range +10% to 30%
Low Range -10% to -20%
Class 2 – High Range +10% to20%
Low Range - 10% to -15%
Class 1 – High Range + 5% to 10%
Low Range -5% to 10%
Fig4 - Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe.
Ayuss S. Kumar 07

8. 3 Main types of pricing for a project
04 Composition of Project Price
3 Main types of pricing for a project
Direct Costs
Contingency Costs
Margin
Indirect Costs
Labor
Estimate Contingency
Owners Contingency
Company Wide Costs
Material
Method of calculation
Method of calculation
Designers Contingency
Profit
Equipment
% of project cost
Contractors Contingency
Parametric
Location
Area or Volume
State of Economy
Industry or Facility Approach
Discipline or Trade Approach
Assembly & systems
Ayuss S. Kumar
Type of Discipline
Unit Price 08

9. Negotiated Construction Procurement Process
05 Types of Estimates
Design Process
Schematic Design
Design Development
Construction Documents
Programming
Programming Budget Estimate
Schematic Design Budget Estimate
Design Development Budget Estimate
Owners Final Cost Estimate
Feasibility Estimates
Order of Magnitude Estimate
Preliminary Estimate
Baseline Estimate
Definitive Estimate
Negotiated Construction Procurement Process
Preconstruction Services
Construction Operations
Preconstruction Services Estimate
Guaranteed Maximum Price Estimate
Change order Estimate
Fixed Price Estimate
Claims and Changes Estimate
Bid Construction Procurement Process
Bid
Construction Operations
Ayuss S. Kumar
Detailed Lump sum or Unit-price estimate
Change order Estimate 09

10. Common estimating errors:
06 Accuracy by Error Prevention
Common estimating errors:
Incorrectly adding a column of numbers.
Incorrectly calculating the price.
Incorrectly transferring the numbers from one page to another.
Making errors in dimensional conversions.
Omitting a page of the estimate.
Misplacing decimals.
Manual scaling of drawings – resolution error.
Ayuss S. Kumar 10

11. Thank you
Ayuss S. Kumar 11