Construction Economics & Estimations Basics

Construction Economics & Estimations

• Construction economics involves the study of economic aspects and principles related to construction projects.
• Key components of construction economics include cost analysis, supply and demand, and project financing.

Estimations

• Estimation is the process of predicting the costs, time, and resources required for a construction project.
• Types of estimations include:
• Preliminary estimate: rough cost estimation done in the early stages of project planning
• Detailed estimate: in-depth analysis of costs based on detailed project plans and specifications
• Bid estimate: a competitive estimate submitted by a contractor in response to a project's bid

Factors Influencing Construction Economics and Estimations

• Materials: prices and availability of construction materials
• Labor: costs associated with hiring and managing skilled and unskilled labor
• Equipment: expenses related to the use of construction machinery and tools
• Market Conditions: economic trends, inflation, and local market conditions affecting costs
• Project Scope: the size, complexity, and nature of the project
• Location: geographic factors that may impact logistics and costs

Key Processes in Estimations

• Quantity takeoff: determining the quantities of materials needed for the project based on drawings and specifications
• Unit cost estimation: assigning costs to each unit of work or material
• Overhead and profit: adding overhead costs (indirect expenses) and profit margin to the direct costs
• Contingency: including a contingency allowance for unforeseen circumstances or changes

Software and Tools

• Estimation software: utilizing specialized software like ProEst, Sage Estimating, or BuildingConnected for accurate and efficient estimations
• Building Information Modeling (BIM): integrating BIM technology for 3D modeling and collaborative project planning

Challenges in Construction Economics and Estimations

• Uncertainties: changes in market conditions, project scope, or unexpected events
• Inaccurate Information: insufficient or inaccurate data in project plans and specifications
• Regulatory Changes: changes in regulations impacting construction practices

Continuous Monitoring and Adaptation

• Cost control: regularly monitoring project costs and adjusting the budget as needed
• Value engineering: finding ways to optimize costs without compromising project quality

Documentation

• Detailed records: maintaining accurate records of costs, changes, and unforeseen events for future reference

Concept of Construction Economics

• Construction economics is a specialized branch of economics that focuses on the economic aspects of the construction industry.
• Key concepts associated with construction economics include:
• Resource allocation: efficient allocation of resources to maximize output while minimizing costs
• Cost management: identification, estimation, and control of costs associated with construction projects
• Supply and demand dynamics: understanding the market forces that influence the supply and demand for construction services, materials, and labor
• Risk analysis and management: evaluation, quantification, and management of risks
• Time value of money: recognizing the value of money changes over time
• Financial viability and feasibility: assessing the financial viability and feasibility of construction projects
• Life cycle costing: examining the total cost of ownership over a project's life cycle
• Government policies and regulations: considering the impact of government policies, regulations, and incentives on construction activities
• Sustainability and green construction: considering the economic implications of green construction methods and materials

Stakeholders of Construction Project

• Owner/client: the individual or organization that initiates and funds the construction project
• Project manager: responsible for overall project planning, execution, and completion
• Contractor: the entity responsible for executing the construction work
• Architect/designer: designs the project, develops plans, and ensures that the construction meets specified standards and regulations
• Engineers: civil, structural, mechanical, and electrical engineers play crucial roles in the planning, design, and implementation of various aspects of the construction project
• Consultants: external experts hired to provide specialized advice
• Government authorities/regulatory bodies: agencies responsible for enforcing building codes, zoning regulations, and other legal requirements
• Financial institutions: provide funding and financial support for the construction project
• End users/occupants: individuals or organizations for whom the construction project is being undertaken

Need of Estimation

• Budgeting: cost planning and forecasting
• Project feasibility: financial viability and feasibility assessment
• Decision-making: informed decision-making based on accurate estimates
• Competitive bidding: bid preparation and submission
• Resource planning: materials, labor, and equipment planning
• Project scheduling: time estimation and project timeline development
• Risk management: identification of contingencies and risk management
• Client communication: transparency and client satisfaction
• Financial control: cost control and financial management

Units of Measurement as per IS1200

• Dimension: measured to the nearest 0.01 m
• Area: worked out to the nearest 0.01 sq.m
• Cubic content: calculated to the nearest 0.01 cu.m
• Weight: worked out to the nearest 0.001 tonnes
• Thickness of RCC slab: measured to the nearest 0.005 m
• Thickness of woodwork: measured to the nearest 0.002 m
• Thickness of steelwork: measured to the nearest 0.001 m
• Length of steel reinforcement bar: measured to the nearest 0.005 m
• Diameter of steel reinforcement bar: measured to the nearest 0.0001 m