Construction Estimates PDF

CONSTRUCTION ESTIMATES COST ENGINEERING What is the purpose of a construction estimate? Estimates for construction are calculations for predicting the cost of a construction project. These estimates also provide valuable information to project planners to assist them in determining the...

CONSTRUCTION ESTIMATES COST ENGINEERING What is the purpose of a construction estimate? Estimates for construction are calculations for predicting the cost of a construction project. These estimates also provide valuable information to project planners to assist them in determining the feasibility and scope of a project. Types of Construction Estimates There are five main types of construction cost estimates, and each is used for a different purpose at a different time in a project lifecycle. 1. Preliminary cost estimation – A preliminary estimate, also called an abstract cost estimate, approximate cost, or budget estimate, is used in the early phases of a project, usually before design documents have been completed. Often a preliminary estimate helps determine if a project will be undertaken or not before they involve too much of your time. Types of Construction Estimates There are five main types of construction cost estimates, and each is used for a different purpose at a different time in a project lifecycle. 2. Detailed estimate – a detailed estimate involves breaking down the project scope into smaller unit prices that can be priced individually. It includes costs for the materials, equipment and labor required to complete the project. Adding these gives you a total project cost. In order to provide a detailed estimate, you need a design that is complete so you or your estimator can quantify the exact work that has to be done. Types of Construction Estimates There are five main types of construction cost estimates, and each is used for a different purpose at a different time in a project lifecycle. 3. Quantity cost estimate – A quantity estimate is based on the actual number of units or amount of work that needs to be provided. The project is broken down into quantifiable pieces and all costs for each piece are added up to get the overall project estimate. It is assumed that there is a standard cost for each unit of work and for the materials purchased. This is all typically quantified in a takeoff. Types of Construction Estimates There are five main types of construction cost estimates, and each is used for a different purpose at a different time in a project lifecycle. 4. Bid cost estimate – A bid estimate is the cost estimate that is submitted to a potential client in hopes of winning the job. It will include all the contractor’s costs for the project, plus allocated overhead costs and profit margin. Types of Construction Estimates There are five main types of construction cost estimates, and each is used for a different purpose at a different time in a project lifecycle. 5. Control cost estimate – A control estimate is used for monitoring the project during construction and is comprised of three separate estimates: the budget estimate for financing, the budgeted cost after contracting but prior to construction, and the estimated cost to complete during the project. These budgets are revised on a regular basis to reflect approved customer change orders and actual costs incurred. Components of Construction Estimates When preparing an estimate, contractors look at three components: estimating technique, degree of accuracy and data source. 1. Estimating technique – There are two techniques used to create the project estimate: top-down and bottom-up. A top-down estimate is created by determining the estimated cost for the whole project and distributing costs to each task based on that estimate. A bottom-up estimate prices each specific task individually to roll up to an actual cost for the overall project. A bottom- up estimate is the most detailed and accurate and can be completed using takeoff software. Components of Construction Estimates 2. Accuracy of Cost Estimates – The accuracy of a construction estimate is based on the amount of information provided in the design documents. As we’ve discussed, contractors often provide estimates at various levels of document completion. As the project development progresses, the estimates become more accurate. There are several types of estimates that are distinguished by the level of accuracy required, including magnitude estimate, feasibility estimate, preliminary estimate and definitive estimate. Components of Construction Estimates 3. Data Sources for Estimated Cost Estimates – There are three potential sources for cost estimate data. The first is a parametric estimate, which starts with unit costs provided by third party or a contractor’s in-house data. The unit cost is used to provide an overall estimate for the project based on the direct construction cost, which includes materials and quantity of work required. The second is expert judgment, when a building expert provides their opinion on the cost for the project. The third is an analogous estimate, where the project is compared to a similar project, and that cost information is used to create an estimate for the current project. Other Types of Construction Estimates 1. Historical – A historical estimate is based on costs from a project budget done in the past of similar size and scope. Often the cost is adjusted for inflation or other pricing factors. Other Types of Construction Estimates 2. Parametric – A parametric estimate uses simple calculations to provide a cost estimate. It is often based on standard rates from a third party or a contractor’s historical data. Other Types of Construction Estimates 3. Plinth Area – Similar to a parametric estimate, a plinth area estimate is based on a standard rate. The plinth area of a building is the area covered by the external dimensions of a building. The plinth area is multiplied by a standard rate for construction in that area to arrive at an estimated cost for the project.. Other Types of Construction Estimates 4. Bottom Up – In a bottom-up estimate each activity is priced individually, then rolled up to the overall project cost. This is the most accurate way to estimate a project. Other Types of Construction Estimates 5. Three Point Estimate – A three-point estimate is based on the average of expected costs in three scenarios: optimistic or best case, most likely or expected, and pessimistic or worst case. The three values are added up and divided by 3 to get the average. Other Types of Construction Estimates 5. Equipment Factored Estimate – An equipment factored estimate is used for projects that involve the furnishing and installation of equipment. The cost of the equipment is multiplied by an installation factor to arrive at the total cost. The installation factor includes subcontractors, direct labor costs, and materials. References https://www.buildxact.com/us/blog/types-of-construction- estimates/