CEE 422 Construction, Cost Analysis.

Prof. Ibrahim Odeh

University of Illinois, Urbana – Champaign. Fall ’09.

Ayuss S. Kumar

Accuracy of Construction Cost Estimating

CONTENTS

04 Composition of Project Price

05 Types of Estimates

06 Accuracy by Error

Prevention

02 Estimating Techniques

03 Range Estimating

01 Importance of Accuracy

In Cost Estimating

00 Abstract 02 - 03

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06 - 07

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00 Abstract

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Accuracy in Cost Estimating helps the Architect – needs to make informed decisions to the owner regarding:

Feasibility

Scale of Project

Phases of Construction

Materials Building Systems

Space Planning

Built up Areas

00 AbstractA

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Cost Estimating Accuracy depends on :

Scope of Project

Time Factor Site & Weather Conditions

Historical Data

Reliability on Info.

Government Rules & Taxes

Labor Unions

03

01 Importance of Accuracy in Cost

Estimating

04

Investment to revenue generated – financing.

Helps keep the project on budget during execution.

Control on cash flow.

Helps justify progress payment to the contractor.

Updates historical data base for future project references.

Arbitration – unresolved claims.

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02 Estimating Techniques

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4 Main types of Estimating Techniques

Project Comparison or Parametric Cost Estimating

Area & Volume Estimating

Assembly & System Estimating

Unit Price & Scheduling Estimate

15-20% Accuracy

5-15% Accuracy

10% Accuracy

2 - 5% Accuracy

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Fig.1 - Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe.

03 Range Estimating

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Assessment of how far a project’s final cost may vary (+/- %) from the single point value that represents the estimate.

Estimate - range of cost outcomes - Represented as a probability distribution curve.

Fig.2 & 3- Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe.

Contingency helps increase accuracy of estimating.

Depends on where the contingency is placed about the point estimate.

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03 Range Estimating

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Estimate accuracy tends to improve with project definition.

Fig4 - Source: From Concept to Bid… Successful Estimating Methods by John D Bledsoe.

Class 5 – High Range +30% to 100%

Low range -20% to -50%

Class 4 – High Range +20% to 50%

Low range -15% to -30%

Class 3 – High Range +10% to 30%

Low Range -

10% to -20%

Class 2 – High Range +10% to20%

Low Range -

10% to -15%

Class 1 – High Range + 5% to 10%

Low Range -5%

to 10%

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04 Composition of Project Price

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3 Main types of pricing for a project

Direct Costs

Contingency Costs

Margin

Labor

Material

Equipment

Industry or Facility Approach

Discipline or Trade Approach

Estimate Contingency

Owners Contingency

Designers Contingency

Contractors Contingency

Indirect Costs

Company Wide Costs

Profit

Parametric

Meth

od o

f ca

lcula

tion

Meth

od o

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lcula

tion

Area or Volume Assembly & systems

Unit Price

Location

State of Economy

Type of Discipline

% of project cost

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05 Types of Estimates

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ProgrammingSchematic Design

Design Development

Construction Documents

Design Process

Preconstruction Services Construction Operations

Bid Construction Operations

Negotiated Construction Procurement Process

Bid Construction Procurement Process

Programming Budget Estimate

Schematic Design Budget Estimate

Design Development Budget Estimate

Owners Final Cost Estimate

Preconstruction Services Estimate

Guaranteed Maximum Price Estimate

Change order Estimate

Detailed Lump sum or Unit-price estimate

Change order Estimate

Feasibility Estimates

Order of Magnitude Estimate

Preliminary Estimate

Baseline Estimate

Definitive Estimate

Fixed Price Estimate

Claims and Changes Estimate

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06 Accuracy by Error Prevention

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Common estimating errors:

1. Incorrectly adding a column of numbers.

2. Incorrectly calculating the price.

3. Incorrectly transferring the numbers from one page to another.

4. Making errors in dimensional conversions.

5. Omitting a page of the estimate.

6. Misplacing decimals.

7. Manual scaling of drawings – resolution error.

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11

Thank you

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