TABLE OF CONTENTS
1.) Purpose of Estimating and Costing
1.1 Owner's Point of View
1.2 Contractor's Point of View
1.3 Designer's Point of View
1.4 Project Engineers Point of View
2.) Importance of Detailed Costing
2.1 During Design and Planning Stage
2.2 Prior to Construction
2.3 During Construction
2.4 Post Construction
3.) Estimating Phases in a project Cycle
3.1 Budgetary Estimate
3.2 Programming Estimate
3.3 Schematic Estimate
3.4 Preliminary Estimate
3.5 Final Estimate
3.6 Construction Estimate
4.) Steps in Preparing Cost Estimate
4.1 Learn About the Project
4.2 Acquire Plans, Specifications and Proposal
4.3 Perform On-site Visit and Ocular Inspection
4.4 Gather Substantial and Accurate Estimate Data
4.5 Prepare Carefully and Promptly the Cost Estimate
5.) Types of Estimates and Their Application
5.1 Ratio Estimate
5.2 Factored Estimate
5.3 Office Estimate
5.4 Definitivr Estimate
5.5 Final Estimate
6.) Hands-on
1.) Purpose of Estimating and Costing
There are several purposes in estimating and costing -- depending on point of view.
1.1 Owner's Point of View
From the owner's point of view, estimating and costing is undertaken to come up with
economical and reasonable budget to complete the project on time with the right quality.
Without estimate, project proponent will not have a reliable and dependable basis is
awarding the project to contractors.
owest biddr is not an always the best bidder who could complete the project promptly
with the required quality.
For owners having an accurate and reliable estimate, contractor's bid the price is not
evaluated as high or low but how close it is to reality ( to owner's budget), ensuring that
the project will be completed on time without sacrificing quality.
1.2 Contractor's Point of View
From the contractor'spoint of view, estimating and costing is undertaken to come up
with realistic and accurate prive to win the bid and gain reasonable profit.
Focusing on winning the project by preparing a very low bid price will jeopardize
opportunity to gain reasonable profit. In worst cases, the project might not be
complete on time without sacrificing quality.
However, aiming for greater profit may end up having a very high bid price and therefore
may not be able to get the project.
For contractors with realistic and accurate estimate, bid is offered not as lowest but as
the most justifiable price to complete the project on time at the required quaity without
sacrificing reasonable profit.
1.3 Designer's Point of View
From the designer's point of view,estimating and costign is undertaken to come up with
realistic and accurate budget acceptable to the owner and in conformance to standards,
codes and regulations implemented by the government primarily focusing on public
safety.
For designes,estimatong and costing is necessary to coe up with alternative budget
options acceptable to the owner, which are economical and reasonable without
sacrificing public safety.
1.4 Project Engineer's Point of View
From project engineers' point of view, estimating and costing id undertaken to come up
with the most economical and reasonable budget necessary to perform construction
activities in conformance to required quality and delivery schedule without sacrificing
workers safety.
2.) Importance of Detailed Costing
2.1 During Design and Planning Stage
2.1.1 Preliminary Cost Advice and Budgetary
For owners, knowing the budgetary requirement is a must. It is necssary to
come up with a GO or NO GO decision.
If preliminary cost advice is known before hand, the owner will have greater
flexibility and elbowroom in providing the required budget.
2.1.2 Studying Possible Design Options
For Designers, It is eccessary to come up with costing of design option to
preliminary present to the owner for acceptance.
With costing and design options, the owner is able to study not only the quality
behind the design but also the cost implication for such option.
2.1.3 Cost Planning
For project engineers, it is necessary to come up with costing of each work item
and plan out cost on a weekly or monthly basis depending on the scope of work.
Preparatio of cash flow is very necessary for budget purposes.
The management can plan for cost appropriation if cost work per week or
month is clear. Budget approval would be easier eventually.
2.2 Prior to Construction
2.2.1 Basis for pricing and tenders
For contractors, estimating and costing is very important in coming up with the
most reasonable price having greater chance of winning the bid and gaining
reasonable profit.
2.3 During Construction
2.3.1 Basis for project/cost control
With work cost details, monitoring and cost control is easier to implement. It
serves as a basis for evaluationg cost performance whether the project has
savings or cost overrun.
2.3.2 Basis for billing and collection
Costing is also necessary for bidding and collection. All accomplishment has to be
estimated znd given appropriate cost.
Without cost estimate, billing would be unreliable. Worst, it might be unrealistic
that the client may seek for further justification.
2.3.3 Evaluating Work Progress
Cash flow is also important for evaluating work progress. With detailed costing,
work items are declared with clear and definite costing in a week;ly or monthly
basis.
This weekly and monthly costing of work items serves as a basis for evaluating
work progress.
2.3.4 Basis for Variation Claims
Change order and extra works has to be quantified and given cost as soon as
possible. It is therefore, very important to come up with an approved cost
estimate before starting to undertake the work.
2.4 Post Construction
2.4.1 PerformanceAnalysis Project
After completing the project, it is still necessary to come up with final costing to
determinehow much profit was gained.
Fianl Costign is also necessary to analyze which work items had incurred greater
cost than expected. Which work items have savings.
The final costing becomes part of cost information needed as reference of future
project.
3.) Estimating Phases in a project Cycle
3.1 Budgetary Estimate
A quick estimate for coming up with costing for the owner to assess initially wheter the
project is feasible or not.
It serves also as reference of the owner on sizing up wheter the financial standing is
sufficient or not.
Owners do not need detailed costing for the purpose of assessing ones financial
capability to undertake the project.
budgetary estimate is most appropriate during conceptualization stage.
3.2 Programming Estimate
With budget of the project known and accepted by the owner, the next thing to do is to
come up with programming estimate wherein budget are sliced in percent weight and
proportionately to major workitem such as -- architectural, structural, mechanical,
electrical and so on.
This estimate is necessary to determine how many budgetsare allocated for each major
work item.
When presented, the owner is given an idea on the cost componentnof each major work
item for further evaluation and refinement of budget.
Programming Estimate is doneduring project definition stage.
3.3 Schematic Estimate
When programming estimate has been finalized, schematic estimates follows and
undertaken b the designer with appropriate plans.
Estimate and costingare more accurate with materialspecification and bill of quantities
known.
This is done during project planning stage.
3.4 Prelimanary Estimate
With project estimates and costing to the owner and project management team, the
contractor does the next estimating when the project is bid out.
The contractor prepares estimates and costing focusing on winning the bid and gaining
reasonable profit. This is done during tender stage.
This is more accurate han schematic estimates since the contractor has to look deeper
up to the methods and techniques to be applied.
3.5 Final Estimate
The contractor who wins the bid does this final estimate. The purpose of this estimating
and costing is to establish cost control.
each work items are allocated with appropriate budget and project cash flow is
prepared. This is more accurate than the prelimanary estimate.
This is done during pre-planning stage.
3.6 Construction Estimate
Finally, the enginner in charge of the project will come up with construction estimate
based on production plan.
the focus of this estimating and costing is maximum utlization of resources yo become
more productive with cost savings.
4.) Steps in Preparing Cost Estimate
4.1 Learn About the Proposed Project
Begin by fully understandung the proposed project package.
It is a must that the estimator should have a general otlook of the project and all its
undertakings by looking for 5W2H. In the Invitation to bid, Instruction to bidders, and
scope of work/ Terms and Conditions the 5W2H are stated.
First W - stands for WHO (is the owner of the project). Obviously, the first thing to do is
to know the owner of the project. Knowing the owner will give us an idea about the
project - about the most acceptable profit margin and the most reasonable cost with the
most satisfying quality. The owner reflects the kind of quality, delivery, and cost of the
projects.Owners have their own style and standard - have their own set of beliefs and
deeply the project owner as customer.Some owners require accreditation. Then no
need to continue if not accredited.Or could not comply requirements.
