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Chapter6.ppt

Construction Management Jump Start

Chapter 6

Estimating Project Costs

Chapter 6
Estimating Project Costs

What Is An Estimate?

An estimate is an educated guess
The estimate is a summary, based on the best information available, o probable quantities and costs of materials, labor, equipment, and subcontracts to complete a project
The estimate includes taxes, overhead, and profit
The estimate is crucial because it can make or break your project either by not pricing everything well or by overpricing

Characteristics Of A Good Estimator

Must be able to build the project mentally before pricing it
Must be able to read contract documents well, be knowledgeable about construction techniques, and must have good visualization skills
Must be able to be practical, yet creative

Characteristics Of A Good Estimator Cont.

Factors Impacting Project Costs

Project size - The larger the project the more it will cost. Also as project sizes increase so do efficiencies around any particular activity.
Complexity of the project – As complexity increases so does the cost. Shape, height, and unique materials. applications, will almost always increase the costs of a project due to resources needed to construct around these limitations.

Factors Impacting Project Costs Cont.

Site location – The location of the project impacts the ease of procurement and delivery of materials, labor, and equipment. Therefore it is going to affect the overall pricing of the project. Locations also impacts the availability and cost of labor.
Time of construction – The estimator must be careful to anticipate fluctuations in prices and availability of labor during different stretches of time.

Factors Impacting Project Costs Cont.

Quality of work – The quality of the project is defined by the standards set forth in the specifications which clearly impacts costs.
Market conditions – In very tight markets where construction contracts are scarce, the cost of construction becomes very competitive, and the estimates will reflect this condition.
Management Factors – Management factors include such things as knowing that a particular owner or architect is more difficult to deal with or that your are going to have to watch things more carefully with an inexperienced subcontractor or knowing that the owner is very slow a making decisions.

Types Of Estimates

Conceptual estimates – Used when there are no drawings at all or when you are in the idea or concept stage of a project. Often the owner does no know if they're project is feasible so they do not wish to start spending money on design.
Preliminary estimates – Used when you have a preliminary set of drawings with overall dimensions and it provides a somewhat higher level of accuracy to establish initial budgets and financing scenarios. However it should never be used to commit to a contract price.
Detailed estimates – Used whenever you have a complete set of plans and specs. Counts every brick and stick but as accuracy of plans/specs increases, so does the time and effort and skill that is required to complete the estimate.

Understanding Project Costs

Direct costs- Costs that actually go into building the facility such as materials, labor, equipment and subcontracts.
Indirect costs – Expenses incurred in order to manage and deliver the materials, labor, equipment, and subcontracts employed on any job. Often referred to as overhead or general conditions and include supervision, job trailer expense, temporary utilities, testing and inspections, and job photographs, security, etc.

The Actual Estimating Process

Getting Started With An Estimate

In preparation for the estimating task the project team must become familiar with the requirements of the project by doing the following
Reviewing the plans and specs
The pre bid meeting
The site visit

Reviewing Plans And Specs

Having an overall understanding of the difficulty of the construction will assist the estimator when making judgment calls that inevitably affect the accuracy of their estimate.
In addition to discovering red flag issues, the plan and spec review provides an opportunity for the estimator to uncover details that require clarification or questions about the project that are not addressed in the contract documents.

The Pre Bid Meeting

This meeting occurs at the project site and provides an opportunity for the bidding contractors to get many of their questions answered.
The estimator is often the person sent, simply because that is the person who is the one most familiar with the project at this stage and who has developed a query list after a through review of the plans and specs.

The Site Visit

No one should ever estimate a job without first visiting the job site.
There are site conditions hat cannot be understood by merely looking at the plans and specs.
Only by walking around will you get a good sense of the lay of the land which will help your judgment with pricing.

How You Build The Estimate

You build an estimate in the same order that you build the actual facility.
Generally you start from the ground up and through the 48 divisions of the 2004 CSI Master Format outline.
Each CSI division is broken down into detailed items of work.
This format is the most common way to organize the estimate.

The Work Breakdown Structure

The WBS establishes the basic building blocks of both the estimate and schedule.
The purpose of the WBS is to organize and identify the work of the project by breaking down each divisions of work into a separate work package.
A work package is detailed items of work bundled together under a particular trade.

Calculating Quantities

You must quantify all of your materials, labor, and general conditions before you can price any of the work.
You must calculate how many first before you can calculate how much.
Once you determine quantities you can apply a unit price factor to the equation i.e. each, linear feet, square feet, square yard, cubic yard

Pricing the Work

Once all of your quantities are calculated you are halfway done with the estimate
Now all that is left is to plug in the unit costs for each item of material, labor, equipment, and general conditions in your estimate.
As an estimator your primary concern is where the costs will come from and their reliability. Most costs derive from R.S. means

Obtaining Subcontractor and Vendor Bids

Today subcontractor and vendor bids make up the bulk of the construction estimate.
While the estimating team is putting together their own pricing for self performed work, they must also be gathering prices from subs for work they are not going to self perform.
The four steps to ensure that the solicitation of the subcontractors and vendors pricing is complete and thorough includes soliciting the bids, receiving the bids, analyzing the bids, and choosing the bids.

Completing the Estimate

Once the estimate is complete, the contractor prepares and submits their bid and delivers it to the owner.
The particular bid procedure will specify when and how the contractors will be notified as to whether they have been awarded the contract.