The labor hours required to construct each installation item are calculated by using a man-hour rate times the take-off quantity cost 30 similar method is to divide the take-off quantity by the production rate. Then costs are applied to the quantified line items. Provisions are made for Indirect costs in addition to the direct costs.
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These factors promote time adjustment of capital costs, following changes in technology, availability of materials and labor, and inflation. Estimates for the cost of facility construction are a major part of the cost estimate domain. A construction general contractor or subcontractor must normally prepare definitive cost estimates to prepare bids in the construction bidding process to compete for award of the contract.
Although many estimators participate in the bidding and procurement processes, those are not a necessary function of cost estimate preparation. Earlier estimates are prepared by differing methods by estimators and others to support the planning process and to compare with bids.
One way to make those estimates is by determining the resources needed e. One advantage of making estimates in this way is that it allows for the segregation of quantities and costs. This way they can be updated separately as new information becomes available. They can also be tracked separately allowing decision makers to make better decisions about the project during its conceptual phase.
A definitive estimate is prepared from fully designed plans and specifications or nearly so , preferably what are called contract documents CD. The standard method is to review and understand the design package and take off or perform a quantity survey of the project scope by itemizing it into line items with measured quantities. RSMeans refers to this as, "Scope out the project," and, "Quantify.
The ASPE proposes a best practice standard method for the quantity survey. Then costs are applied to the quantified line items. This may be called costing or pricing. In estimating for contracting, the cost is what something costs you to build, and price is what you charge another party for building it. RSMeans refers to this as, "Price the quantities. This format is illustrated in the handwritten spreadsheet sample.
For labor, the estimator should, "Determine basic production rates and multiply them by the units of work to determine total hours for the work. The costs which are applied to the line-item quantities may come from a cost book either internal or external or cost database. For construction contractors or construction managers it is important to track and compile past data of trends, completed projects, production factors, equipment changes, and various labor markets. The labor requirements are often the most variable and are a primary focus of construction cost estimators.
The labor hours required to construct each installation item are calculated by using a man-hour rate times the take-off quantity a similar method is to divide the take-off quantity by the production rate. Many estimators use a man-hour norm reference for standard man-hours and apply an adjustment factor for project or task conditions, location, methods, equipment, labor skill, etc.
Direct costs are itemized for all necessary parts of the project. Direct costs are all of the costs which can be attributed directly to the project. Direct costs include costs for general requirements Division 1 of MasterFormat , which includes such items as project management and coordination, quality control , temporary facilities and controls, cleaning and waste management.
Usually, a subtotal of total direct costs is provided in the estimate. Provisions are made for Indirect costs in addition to the direct costs. Indirect costs include overhead , profit , sales or use taxes, payment and performance bonds , escalation , and contingency. Profit is cost to the buyer, but is not a cost to the provider, rather a projection of anticipated income. A well documented cost estimate includes a Basis of Estimate BOE , which describes the scope basis, pricing basis, methods, assumptions, inclusions, and exclusions.
An order-of-magnitude estimate is prepared when little or no design information is available for the project. It is called order of magnitude because that may be all that can be determined at an early stage. In other words, perhaps we can only determine that it is of a 10,, magnitude as opposed to a 1,, magnitude.
Various techniques are employed for these estimates, including experience and judgment, historical values and charts, rules of thumb, and simple mathematical calculations. This involves taking the known cost of a similar facility and factoring the cost for size,  place, and time.
Cost modeling is another common technique. In cost modeling the estimator models the various parameters of the facility and applies costs to the derived scope. Building estimators or architects may use the Uniformat system of breaking down the building into functional systems or assemblies during the schematic design SD phase of planning and design. From Wikipedia, the free encyclopedia.
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December Jelen, James H. June Journal of Construction Engineering and Management. Journal of the American Planning Association. Chemical Process Engineering: Design and Economics. Journal of Cost Analysis and Parametrics. Project cost estimation methods. Parametric estimating Three-point estimation Reserve study Quality costs Project management software Vendor bid analysis. Categories : Project management techniques Cost engineering.
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