1. CON 2001/CVE 4070 Construction Engineering Construction Estimating
Prof. Ralph V. Locurcio, PE

2. Registration info for Spring
CVE 4074/5074-Leading Construction Ops
Syllabus:
Part 1 - Personal Leadership- your style
Part 2 - Organizational Leadership- corporate style
Part 3 - Team Leadership- leading a team
3 Tests + Notebook
Book report: oral & written

3. Cost Estimating
Is Serious Business!

4. So pay close attention!

5. Estimating defined…
A complex process involving the collection of available information on the scope of a project, the expected resource consumption, and future changes in resource costs.
This information is synthesized in a visualization of the construction process and translated into an approximation of the final cost.

6. Components of an estimate…
Systematic analysis of:
Project materials & components
Construction methods & labor
Equipment needed
Temporary work items
Support activities
Externalities

7. Qualifications of an estimator…
Extensive knowledge of:
Construction processes & methods
Materials & methods
Contracts & work practices
Construction documents & details
Background business factors
Design & code requirements
Verbal & written communications
Good common sense & judgment

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

9. Estimating & Bidding
Yes No

10. CSI Master Format-1

11. CSI Master Format-2

12. Engineering Estimates
Design cost estimate or design budget
Engineering cost to design the project
Sometimes called design fee
Sum of task duration in WBS x salary of engr.
Engineer’s estimate of probable cost
Made at phase points: 15%, 50%, etc.
A detailed estimate of probable const cost
Based on 100% plans
Quantity of all materials x cost of materials & labor to install…

13. Design Cost Estimate Design Estimate
Who When P-Hr A-Hr Sal Plan $ Act $ %
John 8/22/ $ $500 $
Jane 8/28/ $ $800 $
Proj Mgt
Sub-task a
Sub-task b
Site Civil
Trans
Structures

14. Engineering Estimate Format

15. Construction Estimates
Detailed estimate of all costs to build the project…. as designed.
Also called the contractor’s bid
Based on “take-off” of all materials from plans x cost of materials
Add labor to install
Add all taxes & fees
Add overhead & profit

16. Typical WBS for Senior Project
Who When Pln Hr Act Hr Plan $ Act $ %Com
John 8/22/ $ $
Jane 8/28/ $ $
Gen Cond.
Sub-task a
Sub-task b
Clearing
Foundation
Walls
Add: Taxes on materials & labor
Overhead
Profit

17. Two broad types of estimates…
Conceptual
Used for early decisions & feasibility
No plans available yet
Rough estimate using minimal data
Relies heavily on past data
Level of accuracy about 70%
Detailed
Based on actual plans, contract docs
Used for contract bids & budgets
Level of accuracy up to 95%
Fixes final price of project

18. Conceptual Const Estimates-1
Based on historical data
Sometimes called “parametric” estimates
Accuracy = +30%
Used for planning purposes when no design
Feasibility estimates
Appropriations estimates
Used for 5% & 15% of Senior Design

19. Conceptual Const Estimates-2
Adjust for Time & location
Also to check validity of detailed estimate
Based on prior experience:
Cost per SF or CF... volume
Cost of equipment vs. structure
Cost-capacity factor- ratio of Q/$
Comparative cost of structure – $/unit

20. Comparative cost method…
Basis is cost per unit based on past experience with similar units.
Compare structures of like construction, (e.g. school: steel, concrete, quality, local labor, weather)
Develop cost per unit, e.g. estimate of school
A$/pupil = A Cost/A#pupils = $1,000,000/100
= $10k/pupil
Apply to new construction:
B Cost = B# pupils x A$/pupil
B Cost = 200 x $10k = $2,000,000

21. Examples: Schools: $/pupil Bridges: $/feet of span Stadium: $/seat
Hospital: $/beds
Offices: $/ft2
Warehouses: $/ft3

22. Variations of comparative cost…
Floor area… cost/ft2 … but
Total horizontal area… all floors equal
Finished floor area… $ based on type finish
Cubic foot of volume… floor height varies
Plant volume… Q = plant output
100mgd WTP = $5,000,000
125mgd WTP = $6,250,000

23. Cost of equipment method…
Assumes cost of equipment (ET) is dominant
Estimate based on % of cost allocated to equipment relative to total cost of facility(TPC)
Estimated cost is proportional to known cost
Must adjust for time & location
Where ET= $$$ equip total = $500,000
Equip = 70% building cost
So TPC = ET/ % ET
TPC = $$$ equip/(70%) = $500,000/.70
= $714,285

24. Plant Cost Ratio Method
Other Methods:
Admin vs Production area… $/SF
Bay… hist data on “typical” bays.. $/SF
Volume… comparative cost of $/CF

25. Time & Location adjustments…
Cost indexing
Based on similar “group” of key items
Compare “group” over time & location
Final cost based on ratio x calculated cost:

26. Time & Location adjustments…
Time Adj = T2/T1 = Inflation factor
Est. Cost = Inflation x Est. Cost
If inflation = 4% per year
Est cost = $500,000
1st year Adj = $500,000 x 1.04 or $520,000
For multiple years… inflation is compounded
So for 2nd year Adj = $520,000 x 1.04 = $540,800
Not: $500,000 x 1.08 = $540,000 !

27. Time & Location adjustments…
Loc Adj = L2/L1 = Location factor
Est. Cost = Location factor x Est. Cost
If Location 1 (MLB)/Location 2 (MIA) = 1.00/1.25
$540,800 = 1.00/1.25 x $540,800 = $432,640
Or….
If Location 1 (NYC)/Location 2 (MLB) = 1.25/1.00
$540,800 = 1.25/1.00 x $540,800 = $676,000

28. Cost forecasting… “The future ain’t what it used to be”… Yogi Berra
Need to project costs to mid-point of the construction year for budgeting w/inflation
Generally average past 2-5 years cost data & project 3-5% per year
1…… 2…… 3…… 4……. 5……. 6…….7

29. Detailed estimates… Based on three primary factors:
A. Scope… quantities
B. Constructability… methods
C. Risk… externalities

30. A. Scope factors… Technology in project - complexity
Milestone deadlines for work - timing
Material & equipment - availability
Staffing needed – skill & availability
Contract terms – allocation of risk
Amount of competition - markets

31. B. Constructability factors…
Construction quality – skill required
Allowable tolerances – productivity
Complexity of design – learning curve
Flexibility of methods – special terms

32. C. Risk factors… Unspecified material or workmanship
Differing site conditions
Error in bidding
Changes in cost over time
Subcontractor error or failures
Weather & environmental issues
Strikes & labor issues
Utilities & support issues

33. Estimating process… 1. Determine project characteristics:
Scope, Constructability, Risk
2. Read the construction documents
3. Examine the project design & site
4. Structure the estimate
5. Determine elements of cost
6.. Calculate estimate

34. Examine Project Design…
Technical specifications
Referenced standards
Project drawings
Testing and performance
Special methods or procedures
Physical elements & site characteristics
Errors & omissions

35. Structure the estimate…
Structure often follows specification template
Ensure nothing left out
Need a plan for completing the project
Logical flow of resources & materials
Productivity factors

36. Determine elements of cost…
Labor- craft & skill resources; sub-contractors; union labor; wage rates; training; “effective” labor rates; productivity factors (weather, complexity, experience, management)
Material- price, shipping, availability, storage, relation to specifications
Equipment- purchase vs. lease, single use, down time, cost of maintenance
Capital- interest rates, payment flow, retainage
Time- overhead costs, required completion date,

37. Calculate the estimate…
Material take-off from plans
Quantities of all construction materials
Compare with specifications
Labor cost for construction or installation
Effective labor rates
Team composition & duration
Construction equipment needed
On hand vs. lease or purchase
Time on job
Summarize all costs
Add taxes on materials & labor
Add OH&P

38. Calculate
the Estimate
$15/LF
$8/LF
$4/LF
$6/LF

39. Typical WBS for Senior Project
Who When Pln Hr Act Hr Plan $ Act $ %Com
John 8/22/ $ $
Jane 8/28/ $ $
Gen Cond.
Sub-task a
Sub-task b
Clearing
Foundation
Walls
Add: Taxes on materials & labor
Overhead
Profit

40. And this is what happens....
if you get the estimate wrong...

41. Pyramid Estimate- due Nov 15
Estimate the cost of the pyramid
Read notes carefully
Spread sheet format in Excel
One price = what is your bid amount?
Include labor, materials & support costs
Graded exercise
Questions?