Introduction

There are many costs associated with

construction projects.
Some are not directly associated with
Estimating construction itself but are important because
they can be significant in determining
in whether project starts or not

Construction  Financial agreements  Public relations

 Real estate transactions  Marketing
 Consultancy services  Maintenance
 Government regulations  Operations
E. K. Luyali 1 2

Introduction Introduction
Estimating is a dynamic process that Estimators consider past projects while
begins in the very early stages of a anticipating new factors.
project and ends when the project is Some of these may include:
turned over to the owner.  Current technologies
 Marketplace demands on material and
As the project progresses the amount labour
of information generated increases.  Quantities of materials
•This information improves an estimate's  Timelines of collective bargaining
accuracy but costs more. agreements
 Levels of quantity
 The requirements for completion
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Introduction What is Estimating in Construction?

If there is a good database of actual
costs from past experiences, quick and
accurate estimates can be prepared.  Cost estimating: Developing an
Each new project provides a clearer approximation or estimate of the costs
picture of the actual cost of construction of the resources needed to complete a
and adds to the value of the data. project.
Big design and construction companies
maintain their own databases.
 Predicting the cost in advance based
Smaller companies may rely on the
data developed from independent cost on a model(formal or informal, plans
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consultants and specs) of a project.

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Cost Estimation Tools & Techniques
Cost Estimating
 Project managers must take cost  Basic tools & techniques:
estimates seriously if they want to • Analogous or top-down estimates: Use
complete projects within budget the actual cost of a previous, similar project
constraints. as the basis for estimating the cost of the
current project.
 It’s important to know the types of
cost estimates, how to prepare cost
estimates, and typical problems
associated with cost estimates.
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Cost Estimation Tools & Techniques

• Bottom-up estimates: Involve estimating
individual work items or activities and Purpose of an Estimate
summing them to get a project total.
To know in advance the expected
• Parametric modeling: Uses project
characteristics (parameters) in a
cost in varying degree of
mathematical model to estimate project accuracy, at different phases of
costs. the project.
• Computerized tools: Tools, such as
spreadsheets and project management
software, that can make working with
different cost estimates and cost estimation
tools easier.
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Estimating Traits Estimating Traits

b) Estimating combines science and art and
The specific format used by estimators varies with the estimates are not guarantees of costs.
type of estimate, type of project, and company c) An estimate can only be as accurate as the
procedures. Generally all estimates share some traits information upon which it is based.
a) As projects develop, there is continual competition  Estimates depend on many factors. Document
among issues of quality, size, performance, and cost. completeness, data base currency, the skill and
judgement of the estimator.
• Owners want the biggest building with the best e) An estimate’s accuracy increases as the design
finishes and systems that will perform over time becomes more precisely defined.
for the least amount of money. f) Methodology and procedure are important for
• The design and construction team uses estimates accurate estimating.
to ensure that good cost information is developed • Otherwise, the ability to process all the
and a feedback loop established so that these information that makes up an estimate will suffer.
conflicts can be addressed as quickly as possible.
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As the design process proceeds, the level of 12
detail increases.

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Estimating Traits From an owner’s perspective an early
Estimates, as a consequence, become more complex, estimateFunctions
helps of Estimate
reflecting the many different factors that go in to each unit
of work.
g) Each estimate is based on previous estimates. Define the affordability of the
project
Inputs of estimate accuracy
Decide the project magnitude
considering available money

Decide the level of quality that is

possible

Facilitate deciding between various

options that may be available
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Functions of an Estimate Functions of an Estimate

 PM team often prepares a detailed estimate in order
 Estimates offer guidelines to the designer, to verify the accuracy of bid prices and to negotiate
who selects materials and sizes for the with contractors.
project to fall within the owner’s budget  An estimate can be used by PM to define the scope
of work for each subcontractor as well as determine
fair pricing.
 At the end of the design process estimates  An estimate can also be used as a planning tool.
must also be prepared by individual • Procurement specialists use it to define quantities
contactors to figure their bid price of given items to be purchased.
 In the field, superintendents consult the estimate to
• These are done with nearly completed design determine;
documents, and are the most time consuming • The total quantity of work in a particular location
and most accurate of estimates • The total number of hours needed to do the work
15 • The materials required 16

Owner’s purpose of estimating Contractor’s purpose of estimating

1. Determining project cost

1. Making investment decision and profit
in the conceptual stage.

2. Negotiating and finalizing 2. Implementing cost control

the contract at the measures
implementation phase.

3. Developing data base that

3. Implementing cost control can be used for future
measures. projects
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Engineer’s purpose of estimate Contractor’s and Engineer’s Estimator
Contractor’s Estimator Engineer’s Estimator
• Determines actual cost of • Determines expected cost.
project for bidding purposes.
1. Provide the owner with
• Does not know who will
probable estimate • Has detailed company cost
data for labour and receive award, therefore
equipment. does not know contractor’s
exact resource costs and
actual labour rates.
2. Evaluate alternatives
• Knows which construction • Must assume probable
methods are to be used. construction methods to be
used.

• Has knowledge of actual • Does not know who project

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materials’ suppliers to be used supplier will be. Must use20
and quantity discount prices. local list prices.

Project size
Is a factor of owner’s needs and is handled differently
Estimate considerations depending on the stage of the project.
 At the conceptual stage it is an issue of basic
capacity, such as;
Every estimate considers the same basic
issues. • Housing units for a real estate development
project
Project price is affected by; • Kilometres of road for a highway development
 Size of the project project
 The principle of economy of scale is an important
 Quality of the project
factor when addressing project size. As projects get
 Location bigger, they get more expensive but at a less unit
 Construction start and duration rate.
 The larger the project, the more efficiently people
 Other general market conditions and equipment can be used.
 As people repeat tasks, they get better and faster,
Accuracy of an estimate is directly affected by reducing cost of labour.
the ability of the estimator to properly analyse  On large commercial building and heavy engineering
these basic issues. 21
projects, worker productivity is plotted into learning
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curves.

Project Quality Location

An owner may require a high-quality project to create
a specific image; Reasons: Constructing a facility in Nairobi is different
from constructing one in Lokichoggio. The
 The boardroom of a corporation may require differences are in the labour costs, the
high-end finishes to create an atmosphere of availability of materials and equipment,
prosperity delivery logistics, local regulations, and
 Owner may need a facility for a specific use climate conditions
 Public safety in power plant or similar project
Whatever the reason, higher quality usually results in The cost of labour and material in different
increase in costs. locations can be predicted by establishing
location indices for different parts of the
Early in the project, an estimator must discuss
expectations of quality with the users, the designers,
country. An index is created for a particular
and relevant government agencies. Tools to estimate
area by comparing the cost of labour,
quality get more refined as design becomes clear equipment, and material for that area to
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national average. 24

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Time
 A project is estimated at a given point in Methods of Estimating
time, but usually the actual procurement
and field construction occur at some point in
the future 1930s 1990s
 Sometimes this future can be years away,
especially in very large or phased projects Per unit accommodation ‘Functional’ or ‘Unit of
occupancy’ method Single
Rate
 Estimates must take into consideration Per square foot floor area Methods
Superficial floor area
when actual project will be built. Labour and
Per foot cube
material cost usually escalate in time. So Elemental cost plan
estimator can predict where these costs will Vertical or horizontal
squares
Multiple
Rate
be at the time of actual construction Approximate quantities Methods
Rough quantities
 Estimator takes past actual costs and
Analytical & operational
adjusts them to today's costs 25 Accurate quantities pricing of bills of quantities 26

Types Of Estimates Single rate methods

ESTIMATING DURING DESIGN:

Design estimates are important tools for the owner
and the project management team as they develop
the project’s scope of work. The discipline of
providing cost information throughout the design
phase makes cost a significant driver for project
team.
By providing cost information early and updating it,
project team is kept in the realities of cost.
 Rough Order Magnitude Estimates

 Square Foot/Cubic Foot Estimates

 Assemblies Estimates 27 28

Rough Order Magnitude Estimates

Rough order of magnitude (ROM) estimates typically Unit of accommodation method
establish a cost per unit of capacity. These units are
developed mainly from past projects.  Common in public bodies for projects
 Cost per bed for a hospital such as educational or health
 Cost per apartment facilities etc. at the inception stage
Cost per pupil for a school

• Client may have an amount of money to
 Cost per kilometre for a highway
spend (a target cost)
Accuracy of ROM estimate depends on quality of data • It is therefore possible to work out the
used likely number of functional units which
Advantage: it can be calculated quickly, often in a
few hours, and is typically assumed to have an can be provided
accuracy of plus or minus 20 %
These estimates are often first costs that an owner
Method useful where a simple and
sees
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quick cost range is needed in the early 30

stages

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Floor area method aka Square Foot Estimates
Square Foot Estimates
This base cost is adjusted to reflect
 Popular for its simplicity more project-specific factors.
• Proposed building is measured at each  Information regarding structural
floor level using internal dimensions – systems
no deductions are made for internal
 Building height
walls, stairs etc
 Exterior closure
• Previous similar building costs are used
by dividing construction costs by the  Overall footprint of building
internal floor area All these factors are assumed by the
 Adjustments can be made for location and estimator if real data are not
inflation available.
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Building volume method Elemental (Assemblies) Estimates

 Uses volume of the proposed  Elemental cost plan
building as the cost yardstick • Currently the most popular method
Not widely used except in Germany used by Quantity Surveyors and
contractors
where there are publications which
list typical building costs in terms of • Advise clients on likely project costs
their volume • Helps designers to work within a budget

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Assemblies Estimates Approximate quantities

In later stages of design, it is possible to
configure estimates into a series of systems. Used in many ways depending on who
uses them and why
This method is called assemblies estimating.  A project QS may want to check cost
It uses system or assembly units of a project forecasts before tenders are returned
•The foundation
• Measurements may be concentrated on
•The roofing
as few items as possible for grouped
•The electrical system, and so on
work components
Since units are smaller
•Estimate becomes more flexible  A contractor needs to price bills of
• Requires more designer input & takes quantities when tendering for work
longer based on drawings and specifications
•Costs more money to prepare
Its accuracy is in 10% range
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Approximate quantities
The accuracy is related to how far the design Analytical Estimating
has developed
Some of the difficulties to be faced are:  Determination of unit rates by examining
• Reliability of historical data must always be individual resources and the amounts
questioned needed for each unit of work
• Preliminaries are usually unique to a
particular job
• Incoming services are seldom the same on  Method is described in the CIOB Code of
different sites Estimating Practice in three stages
• Contract conditions can vary markedly
between projects
• Contingency sums must be estimated for 37 38

each job

Analytical Estimating Operational Estimating

1. Establish all-in rates for the individual
resources in terms of a rate per hour for  Analytical estimating where all
labour and items of plant and cost per resources needed for part of a
unit of materials construction are considered together
2. Select methods and outputs to calculate
net unit rates to set against items in the  Popular with Civil Engineering projects
bill of quantities where it is important to examine
3. Calculate project overheads, summarize methods and durations before pricing
resources and prepare report for the work
management 39 40

Operational Estimating Estimating During Construction

 Most detailed of all estimate types and is
Different construction methods can have also the most important. Companies
significant effect on the cost (interested in actually performing the work)
 Appraisal of the details on the drawings price the project
 Extent of the work described in the specifications  It carries legal implications. If bid is
and bill accepted, company is legally bound to a
 Study of the site conditions specific price for a specific scope of work
Find sequence of work by  On large complex projects, the scope of
 Restraint brought about by site layout works is a continual focus of discussion
 Clients requirements between the contractor and designer.
 The design • Many factors affecting costs lie outside the scope
 Time of the year of works; These are owner-requested changes,
unforeseen conditions, regulatory requirements
 Temporary works 41 42

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Bid estimates Organization of Estimate
 Good organization is key to preparing reliable
 The contractor's bid estimates often reflect estimates and avoiding mistakes. Information comes
the desire of the contractor to secure the from a variety of sources and must be carefully
job. Some contractors have well established catalogued.
cost estimating procedures while others do  A good estimating team’s goals would include

not minimizing the number of company hours involved

while preparing a competitive estimate.
To begin,
 If all or part of the construction is to be  Adequate space is set up
undertaken by the general contractor, a bid  Right mixture of senior & junior team members
estimate may be prepared on the basis of  Forms are assembled
quantity takeoffs from the documents Most important information comes from contract
provided by the owner or on the basis of the documents which explain,
construction procedures devised by the  The scope of the work
contractor for implementing the project.  The conditions the contractor is expected to meet
 The legal requirements of the job
 The schedule of completion
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Taking Off Quantities Taking Off Quantities

Once estimating tasks are identified,
categorized, taking off of quantities  Correct units must used when taking
commences off as given in guidelines in the
This is the foundation of the estimate. relevant Standard Method of
Measurement (SMM)
 Purpose is to accurately determine the
• Standard Method of Measurement of
quantity of work that needs to be Building works (SMM)
performed on the project. Every work
• Civil Engineering Standard Method of
item is measured and quantified, Measurement (CESMM)
separating the work into units of labour, Example
material, and equipment.  Excavation and backfill … m3,

 The goal of the taking off process is to  Formwork …m2,

calculate every item of the project- no 45

 Concrete …m3,
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more and no less.  Structural steel … ton

Taking Off Quantities At the next session

The process requires a thorough
understanding of work involved in Introduction to Taking off
each of different disciplines of the
project
&

Practical Builders Estimating

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