1. Chapter 1
Introduction

2. Objectives Upon completion of this chapter, you will be able to:
List and briefly describe the different functions served by estimating in the construction industry
Briefly describe the cost planning process including the role of conceptual estimates and preliminary estimates

3. Objectives (cont’d.)
Describe the three main project delivery systems—traditional design-bid-build, construction management, and design-build—and explain how conceptual, preliminary, and detailed estimates are used with each
Identify what type of estimating is required for lump-sum, unit-price, and cost-plus contracts

4. Objectives (cont’d.) Outline the detailed estimating procedure
Recognize the need for knowledge of Occupational Safety and Health Administration safety standards and the impact that compliance with the standards has on construction costs

5. Introduction Goal of this book:
Present a method of compiling consistently accurate construction cost estimates
In a minimum of time
Can be easily integrated with latest technology
Intended to represent a standard or basic core

6. What Is an Estimate? Probable total cost of a future activity
Occurs in all industries and government agencies:
Budget preparation for future expenditures
Anticipate what something will cost
Basic approach:
Identify work items to be completed
Measure work items size
Assess likely cost of work

7. The Role of Estimating Figure 1.1
Role of the Estimator in the Traditional Construction Process (Delmar/Cengage Learning)

8. Conceptual Estimates Produced from owner’s notion of the construction:
Lacks design details
Primary factors for project feasibility:
Value and cost of development
Cost profile embraces many constituents
Some costs are easy to establish

9. Preliminary Estimates and Cost Planning
Prepared as design develops
Informs whether design meets the budget
Provides alternative design cost information
Value analysis: improvement justification
Can be subdivided into prices
Groupings of building components

10. Preparing Construction Estimates
Main categories:
Preliminary estimating techniques
Detailed estimating techniques
Influential factors:
Project type
Delivery system
Nature of delivery system contracts

11. Figure 1.2
Types of Project and Estimating Methods (Delmar/ Cengage Learning)

12. Project Delivery Systems and Estimating
Traditional (design-build) delivery
Project is fully designed before work begins
Construction management delivery
Facilitates overlap between project stages
Allows earlier completion
Design-build delivery
Single organization assumes responsibility

13. Traditional (Design- Bid- Build) Delivery System
Figure 1.3
Traditional (Design- Bid- Build) Delivery System

14. Construction Management Delivery System
Figure 1.4
Construction Management Delivery System

15. Design- Build Delivery System
Figure 1.5
Design- Build Delivery System

16. Estimates for Different Types of Contracts
Lump-sum contracts
Defined scope of work for stipulated sum
Cost-plus contracts
Uncertain total cost of construction
Used if work must get underway or is difficult to define
Contract followed by costing of operations

17. Estimates for Different Types of Contracts (cont’d.)
Unit-price contracts
Measurement and payment
Based on pricing schedule
Breakdown of the work
Estimated item quantities
Enables owner to obtain competitive prices
Some cost control

18. Estimates for Different Types of Contracts (cont’d.)
Detailed estimates
Stages:
Quantity takeoff
Recap quantities
Pricing the recap
Pricing subcontractor’s work
Pricing general expenses
Summary and bid

19. Estimating and Construction Safety
Occupational Safety and Health Administration
Safety standards
Failure to comply may result in fines or imprisonment
Cost of poor safety on the work site
Growing awareness
Direct and hidden costs

20. Summary Estimating serves several purposes
Preparation of bids and cost control
Conceptual estimates: project feasibility
Preliminary estimates: budget control
Detailed estimates: forecast costs accurately
Be aware of safety requirements
Occupational Safety and Health Administration