Construction cost estimation is done to know in advance the expected cost in varying degree of accuracy, at different phases of the project.
Owner’s Purpose of Estimate
  1. Making investment decision in the conceptual stage.
  2. Negotiate and finalize the contract at the implementation phase.
  3. To implement cost control measures.
Contractor‘s Purpose of Estimate
  1. Determine project cost and profit.
  2. To Implement cost control measure.
  3. To develop data base for that can be used for future project.
Engineer‘s Purpose of Estimate
  1. Provide the owner with probable estimate.
  2. Evaluate alternatives.
Comparison of Contractor‘s and Engineer‘s Estimator
Contractor’s Estimator
Engineer’s Estimator
  • Determines actual cost of project for bidding purposes.
  • Has detailed company cost data for labour and equipment.
  • Knows which construction methods are to be used.
  • Has knowledge of actual materials suppliers to be used and quantity discount prices.
  • Determines expected cost.
  • Does not know who will receive award, therefore does not know contractor’s exact resource costs. Does not know actual labour rates.
  • Must assume probable construction methods to be used.
  • Does not know who project supplier will be. Must use local list prices.
Construction cost Estimation
Fig: Construction cost Estimation
TYPES OF ESTIMATES
  1. Preliminary
  2. Unit price
  3. Assembly or Conceptual Cost
  4. Detailed estimate
Each phase of a project life cycle requires a different type of estimate–each estimate requires different types of information.
  1. Preliminary Estimate- “Order of Magnitude”
  • A cost prediction based solely on size and/or capacity of a proposed project.
  • Before any engineering or design is completed.
  • Rely on broad data from already executed similar project
  • relate cost in rupees to the main capacity/size parameter
  • number of beds in hospital
  • square feet of office space
  • number of students in school
Advantageous
  • Allows a quick determination of the feasibility of a project
  • A quick screening on alternatives, etc. (e.g., should it be a concrete building or a steel building !).
Purpose:
  1. Ranking alternatives
  2. Evaluate economics and financial feasibility
  3. As a check on more detailed estimates
2. Unit Price Estimate
Unit prices are obtained from data on projects already performed.
  • Cost of labor, material, and equipment for all units of work are added together and divided by the number of units involved.
3. Assembly or Conceptual Estimate
  • Performed when conceptual design decisions are being made.
  • Work package concept can be used to determine the element or assembly to be studied
  • We need a breakdown of cost of a completed project into its functional elements to:
  • Find the relationship between element cost and project cost
  • Distribution of cost between constituent elements (sq. feet of _____)
4. Detailed (Definitive )Estimate
  • Prepared after drawings and specification are completed.
  • Requires a complete quantity takeoff based on drawing and the complete set of contract documents
  • Need information on labor rate "productivity", material cost, cost of renting or purchasing equipment
Variation Factors in Estimating
1. Time
  • We base our estimate on the cost of existing projects that were built in the past
  • Price-level changes over time
  • We need to project costs of future projects
  • Many organizations publish construction cost data on regular basis.
Cost Indices
  • Used to update old cost information
Uses
  1. To update known historical costs for new estimates
  2. To estimate replacement cost for specific assets
  3. To provide for contract escalation
Limitations
  1. They represent composite data, average of many projects.
  2. They fail to recognize technological changes.
  3. There is a reporting time log.
To update old cost information to current date
Cost of new facility = cost of old facility x (new cost index/old cost index)
To predict future cost
F = P (1 + i)n
F  = future cost
P  = present cost
i   = predicted rate of cost escalation per period
n  =  number of periods (years)
2. Location
  • Some factors affecting cost in different locations are:
  1. Transport cost
  2. Taxes
  3. Labor supply and local productivity
  4. Codes and local inspection
  • Construction costs also vary in different regions of the USA.
  • ENR and Means publishes periodically the indices of local construction costs in the major cities.
3. Size
  • As the quantity built increases, the unit cost decreases,
Size Factor = (Proposed Size/Comparison Size)
  • UCM = Unit Cost Multiplier
UCM = SF-1

4. Shape
5. Other Factors
Hard to quantify but should be evaluated
  • Quality
  • Soil condition
  • Weather Condition
  • Competition
  • Productivity
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