QTS223 Principles of Estimating – First Lecture Notes Second Semester (2021/2022 Session)

1.0 Estimation
Estimating can be described as a reasonably accurate calculation and assessment of probable
cost of executing defined work under known conditions. Its main purpose is to give a
reasonably accurate idea of the cost of a project to enable a person or government wishing to
execute a project to decide whether the project can be undertaken as proposed or needs to be
reviewed or abandoned. Estimation in the construction industry has been differently defined by
different stakeholders. One of such stakeholders described it as calculation aimed at
determining the cost of a whole building or part thereof while another one defined estimating
as a technical process of predicting cost of construction. Estimating process involves both
calculation and assessment using technical data and human judgement of circumstances and
probabilities. It, in simple terms, involves calculation of cost of materials, labour, plants, and
other costs associated with erecting the building such as overhead, profit for contractors, etc.
1.1 What is an Estimate?
An estimate has been described as a statement of how much a particular work will probably
cost. An estimate has also been described as a reasonably accurate calculation and assessment
of probable cost of executing a defined work under known conditions. It is obtained from
calculating the cost of materials, labour, plants, overhead and other items, such as profit
(where appropriate), required for executing the work. The calculated total cost is usually
referred to as the estimated cost of the work.
1.2 Types of estimates
There are principally two types of estimates that differ on the basis of their respective purposes
and information available at the time of their preparation. The first type of estimate is referred
to as approximate or feasibility estimate while the second type is known as detailed estimate
which is also known as tender or bid estimate.
1.2.1 Approximate or Feasibility Estimates are usually prepared to determine the preliminary
cost of a project before detailed designs and specification are completed. They enable a project
owner to know financial implication of his/her proposal and decide whether the project can be
undertaken as proposed within available budget or the proposal has to be reviewed in line with
available resources. Approximate estimates can also serve the following purposes:
• Granting administrative approval for proposed projects;
• Obtaining rough idea of probable expenditure to be incurred to procure a project;
• Enabling prospective building owner to know whether his/her funds can procure the
proposed project or a review of either the project or the budget has to be made
• Budget preparation;
• Providing basis for projecting rent/lease fees, selling price of a structure, etc.
Preparation of approximate or feasibility estimates involves assessment of probable costs of
various design proposals and offering suggestions on most economically viable option.
1.2.2 Approximate Estimate Techniques.
Various techniques are used in preparing approximate estimates for buildings and/or civil
engineering structures. The most common techniques used in preparing approximates for
buildings include the following:
• Interpolation: Interpolation is a technique used in the early stages of design sequence
when information, drawn or otherwise, on a proposed project is in short supply. It
requires a good deal of skill and experience and is the process of adding the cost of new
items to the cost of an existing similar project or deducting the cost of items to be
removed from the cost of the base project to arrive at the approximate estimate for a
new project. Under this method, cost analysis of similar project is used as a basis for
preparing approximate estimate for a new project. If a client wishes to exclude some
items contained in the base project in his/her new project, the cost of such items is
deducted from the cost analysis of the base project before establishing the approximate
cost for the new project. In the same vein the cost of new item the client wishes to
introduce in the new project, that are not in the base project, should be added before
establishing the approximate estimate for the new project.
For example if the cost analysis of a completed project is as follows:
Substructure N2,750,000.00; Blockwork N1,350,000.00; Concrete Work N8,000,000.00;
Roofing N900,000.00; Electrical and Plumbing Installations N550,000.00; Rendering and
 Painting N775,000.00; Ceramic Tiles N635,000.00; Hardboard Ceiling N75,000.00; what
will be the approximate cost of a new similar project in which the owner wishes to
substitute ceramic tiles with marble whose cost is N2,350,000.00 and introduce P.O.P.
ceiling finish costing N1,275,000.00 instead of hardboard ceiling, and apply tyrolen finish
worth 340, 750.00 on rendered walls?
Solution:
Cost of base project = N15, 035, 000.00
Add cost of new items =
Marble N2,350,000.00
POP Ceiling Finish N1,275,000.00 N3,625,000.00
Revised Cost of Base Project N18,660,000.00
Deduct cost of substituted items
Ceramic tiles N635,000.00
Hardboard Ceiling N75,000.00 N710,000.00
Approximate cost of Proposed Project N17,950,000.00
• Unit method is based on cost per functional or service unit of a building e.g. cost per
bed space in a hospital or cost per pupil in a school or cost per guest room in a hotel.
Approximate estimate is, under this method, arrived at by multiplying cost per service or
functional unit of previously constructed building with the number of such units in the
proposed project. The unit rate can be adjusted to take care of inflation or other factors.
E.g. if the cost of constructing a fifty bed hospital was N5, 000, 000.00 its cost per bed
space is N5, 000, 000.00/50 = N100, 000.00. The approximate cost of constructing a
hundred bed hospital will under this method be N100, 000.00 x 100 or N10, 000, 000.00.
Approximate Estimates for some civil engineering structures are also prepared using this
method as follows:

• Irrigation Channels per KM or per Hectare

• Roads and Highways per KM

• Bridge and Culvert per running metre span

 • Sewage and Water Supply per head

• Overhead Water Tank per litre or gallon

• Superficial or Floor Area Method- This method is a single price rate method based on
the cost per square metre of a building. The use of this method, which is probably the
most frequently used method of approximate estimating, is recommended to be
restricted to the early stages of the design sequence. It involves measuring gross
internal floor area of a bldg with no deduction for internal walls, stairwells, etc. while
external works are calculated separately and added to the estimate. Its major advantage
is that most published cost data is expressed in this form. Though the method is quick
and simple to use but it is imperative to use data from similarly designed projects.
Another advantage of the superficial method is that the unit of measurement is
meaningful to both the client and the design team. Although the area for this method is
relatively easy to calculate, it does require skill in assessing the price rate. It involves
measuring gross internal floor area of a bldg with no deduction for internal walls,
stairwells, etc. while external works are calculated separately and added to the
estimate. The rules for calculating the area under the method are:
• All measurements are taken from the internal face of external walls. No
deduction is made for internal walls, lift shafts, stairwells, etc. – gross internal
floor area;
• Where different parts of the building vary in function, then the areas are
calculated separately
• External works and non-standard items such as piling are calculated separately
and then added into the estimate. Figures for specialist works may be available
from sub-contractors and specialist contractor.
To calculate the approximate cost of a new project using this method one should obtain
the cost/m2 of a similar project and multiply it with the gross floor area of the proposed
project. e.g. if the cost/m2 of a completed project is N85,000.00 and the gross floor area
of a similar proposed project is 1350m2, the approximate cost of the proposed project is
1350 x N85,000.00 = N114,750,000.00.
c. Cubic Method: this method involves determining cubic content of a building by
obtaining its volume through multiplying its length by its breadth and height. External
length and breadth are used while height is usually taken from floor level to top of roof.
Area of each floor is measured while height of each floor is taken from the floor level to
top of the next floor in determining the cubic content of multi-storey building. The total
volume is then added together to arrive at the total volume. Rate/m3 of similar previous
building is then multiplied by cubic content to establish the approximate cost of the new
building. e.g. if the cost/m3 of a completed project is N28,750.00 and the total volume
of a similar proposed project is 350m3, the approximate cost of the proposed project is
N28,750 x 350 = N10,062,500.00.This technique is more accurate than the floor area
one.
d. Approximate Quantities Method: it involves measurement of quantities but can only
be used if there is sufficient information to work with. The measurement approach
commonly used involves grouping items that can be undertaken in sequence together
and giving them a common unit of measurement such as m, m2 or m3 .Composite rates
are then built up from available data and used to determine the approximate estimate.
Measurements are taken gross without deduction except for large openings under this
method. For example:
Use approximate quantities technique to calculate the approximate cost excavating
vegetable soil; exc. to reduce level; exc. foundation trench to receive conc.; L & C
bottom of trench; concrete (1:3:6/19mm aggregate) in foundation; 2225mm solid
blockwork; Back fill trench with excavated materials and Disposal of surplus excavated
materials. The total approximate quantities is 445m2 while the composite rate is
N11, 900.00/m2 as per the breakdown below:
Breakdown of Composite Rate
Excavate vegetable N1250.00
Exc. to reduce level N750.00
Exc. foundation trench to receive conc. N1,500.00
L & C bottom of trench N350.00
 Concrete (1:3:6/19mm aggregate) in foundation N5750.00
2225mm solid blockwork N1,550.00
Back fill trench with excavated materials N300.00
Disposal of surplus excavated materials N450.00
Composite rate/m2 N11,900.00
Approximate cost of item = 445 x 11,900 = N5,295,500.00

1.2.2 Detailed Estimates: prepared by assessing the quantities and cost of everything
required for satisfactory completion of a project. It is the most reliable form of estimate. A
detailed estimate is usually prepared using any of the following methods:

• Unit Quantity Method: under this method, work to be undertaken is divided into
items of work each of which is given a unit of measurement such m, m2 or m3.
Quantity of work under each item is then measured after which the cost per unit
quantity of each item (i.e. cost of materials, labour, plant, overhead and profit.),
which is usually referred to as rate, is calculated. The total estimated cost of the
item is determined by multiplying the number of units by the cost per unit. For
example if the quantity of concrete item in a bill of quantity is 189m3 and rate per
m3 is N17,375.50, the estimated cost of the concrete item will be the product of
multiplying 189 by N17,350.00 which is equal to N3,279,150.00. This is the method
commonly used in costing items of work contained in bill of quantities. The method
allows for comparison of unit costs of similar items of work in different projects and
easy adjustment of total estimate for variation in quantities.

• Total Quantity Method: this method involves calculating the cost of quantity of
materials, labour, plant, overhead and profit required to undertake an item of work
and summing them together to arrive at the estimated cost of the item.