CE 12
Construction Methods and Project Management
LECTURE 9
CONSTRUCTION COST ESTIMATES
SAFETY AND CONSTRUCTIO
RISK N INDUSTRY
MANAGEMENT
FINANCIAL
SCOPE
MANAGEMENT
MANAGEMENT
CONSTRUCTIO
TIME N PROJECT
MANAGEMENT MANAGEMENT PROCUREMENT
MANAGEMENT
COST HUMAN
MANAGEMENT RESOURCES
QUALITY MANAGEMENT
MANAGEMENT
In the business of design and construction,
profitability is based on accurate and
complete cost estimation
“Cost estimating is employed as one of the main tools of
successful cost management. Once an initial budget has been
established, it is important to test its assumptions by
employing a series of increasingly precise cost estimating
techniques that coincide with further development of design
and construction details.”
Estimating requires a
talent to predict or
avoid the unexpected.
A good estimator
understands
construction materials,
methods and systems,
as well as the labor and
equipment required to
complete all tasks in
their correct sequence,
on time and on budget.
The structure of an estimate
Estimates are typically organized in a work-breakdown structure (WBS).
A work breakdown structure (WBS) is a hierarchical system used to define and group
discrete tasks or elements, covering the work scope of the project.
100% Rule:
A WBS must include 100% of the work defined by the project scope and capture all
deliverables – internal, external and interim.
The structure of an estimate
The Construction Specification Institute’s (CSI) has
created the "de facto" standard for the Construction
Industry (known as MasterFormat).
The CIS has also created the UniFormat, a new
design-based structure focusing on early stages of a
project planning.
MasterFormat
(also referred as the CSI Format)
- Created by the Construction Specification Institute CSI, 1961
- Used by nearly every business, in specifications and pricing
- Focus on materials and methods (construction approach)
- Contains 49 divisions (as of 2008)
- Better suited for pricing & construction
Example:
DIVISION 05 – METALS
05 00 00 METALS
05 01 00 Maintenance of
Metals
05 10 00 STRUCTURAL
METAL FRAMING
05 12 00 Structural Steel
Framing
For more information
http://www.csinet.org/s_csi/sec.asp?CID=1377&DID=11339
Uniformat
-First introduced in 1998, Guiding Principles established
in 2007
- Functional elements of a project (design approach)
- Organized in nine categories
- Better for conceptual understanding of a building
- Provides a way to compare major components of
different projects
Uniformat
A Substructure
B Shell
C Interiors
D Services
E Equipment &
Furnishings
F Special Construction
& Demolition
G Building Sitework
Z General
CONSTRUCTION COST ESIMATING
An estimate may be defined as a process of calculating.
Forecasting or predicting the costs and quantities of the
different item of work included in the bid schedule of a
certain project proposed for construction.
KINDS OF ESTIMATES
Range in accuracy
1.0 Floor Area Estimate +/- 40%
2.0 Function Estimate +/- 30%
3.0 Factor Estimate +/- 20%
4.0 Parameter Estimate +/- 15%
5.0 Detailed Estimate +/- 7%
1. FLOOR AREA ESTIMATE :
Experience showed that for a similar building project, the building costs are very closely
related to floor area. It is based on historical data.
A minimum of information is used to develop this type of "Ball Park Estimate." The
estimate is prepared from in-house-data available from past jobs on similar plants. From these
actual jobs, the proposed plant capacity is divided by an existing plant cost. This cost is
multiplied against the new plant capacity or unit to derive new plant cost and then adjusted
for escalation. A cost estimate determined this way is only valid for a similar plant.
2. FUNCTION ESTIMATE: Measures the cost of
a building relative to its use or function.
Type of Project Function Estimates
School Building Cost per
student
Hospital Cost per bed
Theater Cost per seat
Parking deck Cost per
parking space
3.FACTOR ESTIMATE:
A factored estimate requires that all process equipment must be priced. A
factored estimate is produced by taking the cost of individual types of
process equipment, and multiplying it by an "installation factor" to arrive
at the Total Direct Process Cost.
In construction, a factor estimate uses known data and factors (like cost
per square foot or equipment installation rates) to estimate project costs,
especially in the early stages when detailed information is limited.
3. PARAMETER ESTIMATES:
This is an improvement over the floor area estimate because several
parameter measures are used instead of one. Lump sum cost of trade
are related to component system of construction.
a. Structural steel cost related to gross area covered.
b. Parking area per number of building occupants.
c. HVAC cost per CM of the building.
5.0 DETAILED COST ESTIMATES:
This is a careful calculation of the quantities and costs of
everything that is stipulated in the contract based on
detailed construction plans, specifications and bid documents.
A detailed estimate of the cost is prepared by
determining the cost of materials, labor, equipment,
subcontract work, overhead, and profit. Detailed estimates
are generally prepared by the contractors from a complete
set of contract documents prior to submission of the bid to
the owner.
Major elements of Detailed Cost Estimate
-Direct costs (may be grouped in systems or
assemblies)
Materials
Labor
Equipment
Major elements of a Detailed Cost
Estimate
- Indirect costs
Taxes
Insurance
Bonds
Operating costs
- Overhead, profit, other markups
- Contingency
- Time & escalation
- Phasing & mobilization costs
- Geographic index
COMPETITIVE ESTIMATING AND BIDDING
“Bid low enough to obtain the project, yet high enough to make profit”
is the most competitive bidding Philosophy. Competitive estimating and
bidding rely on the following factors:
1. Accuracy of quantity take-off and unit cost analysis
2. Quotations of Suppliers and Subcontractors
3. Competitors bid price
4. Construction Methodology
5. Direct Labor rates
6. Equipment rental rates
Common estimating options
- Spreadsheets and manual takeoffs
“Excel is still the king”
- CAD and digital takeoff systems
- Online databases and services
BNI
R.S. Means
- Corporate software (modular systems)
- Building Information Modeling (BIM)
Estimating Software - Desirable Features
- Must be able to handle multiple projects (!)
- Hierarchical/WBS organization
- Detailed view per item
- Take-off system (screen-based or digitizing devices)
- Handling of complex systems and assemblies
- Items linked to cost of products & resources
(labor, materials, subcontractors, etc)
- Automated calculations
- Indirect costs, markup & overhead
Estimating Software - Desirable Features
- Purchasing & contracting
- Cost comparisons (between different systems &/or
providers)
- Closeout capabilities, (Manual overrides &
customization)
- Reporting (links to scheduling)
To Be or not to Be(IM)
BIM Advantages
- Better coordination
- Problems identified earlier
- Hidden conflicts are discovered more easily (Structural
vs MEP)
- Reduction of RFIs
- 2D Drawings are an output of model
- Can Produce takeoffs
To Be or not to Be(IM)
-BIM Challenges:
- Heavy requirements (processing power, storage, net
traffic)
- Adoption of same technology across
different disciplines
- Existing legacy of 2D CAD
- No standards to date
- Does not replace knowledge of materials & systems
- Misconception that BIM will do the work for you
