8 Questions (cost & estimating 2)

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Overhead and Contingencies

Lecture 4

2

Overhead and Contingencies

 Office Overhead:

 Costs of doing business and fixed expenses that must be paid by the contractor. They are not readily chargeable to one particular project.

 Job Overhead:

 The items of job expense that cannot be charged directly to a particular branch of work, but are required to construct the project.

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Home Office Overhead

 Also known as:

 General overhead

 Indirect overhead cost

Home Office Overhead

 Rent

 Office utilities

 Office supplies

 Postage

 Insurance on office

 Taxes on office

 Office equipment

 Salaries

 Executives

 Accountants

 Estimators

 Purchasing agents

 Bookkeepers

 Secretaries

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Home Office Overhead

 Advertizing

 Books and magazines

 Legal fees

 Design costs

 Donations

 Travel

 Vehicles for office staff

 Club and association dues

 Depreciation

 Office equipment

6

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4

Job Overhead

 Also know as:

 Project overhead

 General conditions

 Plant and Equipment

 Professional Services

 Direct overhead

 Indirect field costs

Job Overhead Includes

 Salaries

 Superintendent

 Assistant superintendent

 Engineers

 Timekeeper

 Forepersons

 Security

 Secretaries

 Temporary

 Buildings

 Barricades

 Enclosures

 Partitions

 Storage

 Elevators, hoists, and cranes

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Job Overhead Includes

 Strom water control

 Sediment tracking

 Erosion control

 Concrete washout

 Noise control

 Dust control

 Temporary office

 Rent

 Utilities

 Office equipment

Job Overhead Includes

 Temporary utilities

 Power

 Lights

 Heat

 Phone

 Water

 Sanitary facilities

 Toilets

 Protection of property

 Repairs

 Cleaning

 Permits

 Surveys

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Job Overhead Includes

 Testing

 Winter conditions

 Bonds

 Insurance

12

Scheduling

 The length of the project affects the overhead expenses.

 The estimator should estimate an approximate length of time for the project as the basis for estimate.

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Schedule

 Needed to determine job overhead

 Process

 List all activities

 Assign durations

 Sequence the activities

 Calculate start and finish dates

Precedence Diagram

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15

16

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Contingencies

 A sum of money (or percentage) added to the bid for items that could not have been anticipated at the time of estimating.

 For items left out

 For escalation

 Often used as an excuse for poor estimating practices

 Note: This practice should be avoided

Project Contingencies

 Unexpected conditions that cannot be determined during design

 Change orders

 Project risk

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Project Contingencies

 Minimize by identifying problems and mitigating

 Who owns the contingency

 Owner

 Contractor

 Shared