Construction Cost Estimating Basics

Course Information

• Course Title: Fundamentals of Project Management
• Code: CIV280
• Lecture No. (9): Cost estimating in construction projects
• Lecturer: Dr. Eng. Abdallah Atef Abdou
• Affiliation: Assistant professor - Civil Engineering Department – Assiut University

Introduction to Construction Estimating

• Construction estimating is the process of calculating all costs for a construction project. This includes both direct costs (materials, worker wages) and indirect costs (equipment depreciation, office salaries).
• Professional estimators perform this preconstruction step to ensure projects are completed profitably.
• Accurate estimating requires detailed knowledge of construction materials, specifications, techniques, codes, and pricing trends.

Importance of Accurate Estimating

• Accurate estimating is crucial for construction project success.
• Owners depend on estimates to determine project feasibility within their budget.
• Design or scope changes may be necessary after preliminary estimates.
• Contractors rely on accurate estimates for competitive and profitable bids.
• Underestimating costs can force contractors to cut into their profit margin.
• Overestimating costs can lead to bids too high for selection. Estimates must balance owner budgets and contractor profit.

Steps in Construction Estimating

• Review the bid package (agreements, bond forms, general conditions, specifications).
• Conduct a site visit to understand site conditions (drainage, soil, utilities).
• Perform a material takeoff (counting materials needed).
• This can be manual or use digital estimating software.
• Ask for pricing from suppliers and vendors.
• Evaluate labor requirements (needed roles, hours, crew productivity).
• Determine insurance and bonding costs (general liability, builder's risk, errors & omissions).
• Calculate overhead and indirect costs (office space rent, administrative salaries, software subscriptions).
• Account for profit and contingencies (contractor profit/fee, project unanticipated costs).

Types of Cost Estimates

• Design Estimates:
• Screening estimates (rough, order of magnitude)
• Preliminary estimates (conceptual, rougher estimations)
• Detailed estimates (definitive)
• Engineer's estimates (plans and specifications).
• Bid Estimates:
• Direct construction cost including supervision, plus markup for overhead and profit.
• These are derived from subcontractors' quotes, material takeoffs, and construction procedures
• Control Estimates:
• Used to monitor the project during construction.
• Based on available data to set a budget, projected cost, and estimated cost of completion.

Methods for Calculating Construction Costs

• Approximate Methods:
• Unit methods (e.g., cost of one student in a school project)
• Unit area or volume (space) method (dividing cost by building area or volume)
• Element method (dividing project into elements for cost estimation)
• Detailed Methods:
• Using detailed methods to estimate costs for items in a project, and direct, indirect costs for the project. These methods are required for greater accuracy within the contract negotiated between the owner and contractor. Indirect costs include senior management, site management, profit, risk, and guarantee. This is known as mark up..

Calculating Unit Rate

• Step-by-step process for calculating unit-rate costs.
• Includes: reviewing drawings, site visits, material takeoffs, estimating labor costs, material cost, subcontractor costs, management/overhead costs, and profit.