Estimating

CTC-415

Estimate Types

• Concept

• Detailed

• Definitive

Example

• You want to buy a car• ROM - $14000 -$16000 or monthly payment

• New or Used

– Find Car• Detail - what options, which model $15,595

• Definitive - tags, tax, bank charges $16,750

Concept or Preliminary

• Little data to work with

• Rough order of magnitude– Is the project a go? Or too pricey

• Time referenced cost indices– Can be based on resources or final product cost– Limited to

• How similar is current job to indiced jobs

• Factors included in price (land, financing)

Concept

• Time referenced cost indices– Can be based on resources or final product cost– Limited to

• How similar is current job to indiced jobs

• Factors included in price (land, financing)

Example – Time Indices

• Wise to keep records of costs to use in determining cost of current project– Can use inflation to increase costs of similar projects to

current costs

• Cost-Capacity Factor• Look at cost/unit of product (or size)• C2 = C1(Q2/Q1)

x • x is an Empirical Factor based on documented

records for different types of projects  – x = 0.6 for some types of plants 

Example

• C1 = 4,200,000

• Q2 = 150,000, Q1 = 120,000

• x = 0.8

• C2= 4,200,000 (150,000/120,000)0.8 = 5,000,000

• Does not look at time difference

Example 2

•  C2 = C1(I2/I1) (Q2/Q1) x 

• I2, I1 are cost indices for the project years

• Usually reflect change in CPI from base year

• C2 = $4.2 M (4.04/2.48)(150/120)x

• C2= $8.2 M

Component Ratios

• Once design has started and major components have been spec’d – can determine cost using

• Equip – Install – Cost ratio or plant cost ratios– (EQUIP $)/(EQUIP & INSTALL $) = RATIO FROM

HISTORICAL DATA

• Plant Cost– MAJOR EQUIP $/ PLANT COST = RATIO

– OR FACTOR EACH PIECE AND ADD TOGETHER

Parameter Costs

Relate costs to a few parameters (SF or bldg)

• Usually does not include land or cost of bringing in utilities

Detailed Estimate

• After concept design and most of detail work

• Requires– Quantity take-offs– Costs/unit

• Needs to be done carefully – so that margin of error is low (don’t eat into profits)

• Can also find errors

Detailed Estimate

• In addition to quantity and prices, • to get total price

– Add in indirect cost – Plant and equip– Home-office OH– Profit– Escalation– Contingency

Labor Productivity

• Need to Evaluate

• Effect of local practices

• Market competitiveness

• Weather

• Completeness of plans and specs

• Can lead to big differences in final price

• Union or non-Union?

Fair Cost Estimate

• Prepared from bid doc.• Can serve as final check of plans before

releasing for bid• Used for

– Determining measured job progress – For scheduling and cost control

•  Done by Engineer/designer to check bids submitted

Contractors’ Bid Estimate

• May be less detailed than FCE is

• 30-80% of project often is sub’d

• Contractor does not need to detail sub bid unless doing cost and work

Definitive Estimate

• More refined and accurate than bid• Estimate gives final project cost with small margin

of error • Separate projects into 4 broad categories• 1) Unit price projects

• Prices set – quantities vary• May do definite estimate at bid

Definitive Estimate

• 2) Traditional projects• Lump sum • Guaranteed max price, cost and low bid = definitive estimate• Definitive estimate done before all drawings are done• Has contingency fee• Cost + - same as GMP

Definitive Estimate

• 3) Design Construction– Lump sum– Chance for owner since he may get contract

finished without desired product– GMP– Cost + - since designer is constructing – Can get cost estimate sooner without all design

completed

Definitive Estimate

• 4) Professional Construction Management– Definitive est can be completed early due to

interaction between PC – designer – contractor 

• Contingency factor – Experience factor to remaining work

• Monthly summary

Estimating and Controlling Labor Costs

• Hard to estimate labor

• 2 components to labor cost– Price in $ terms (wages, fringe, payroll,

insurance, taxes)– Productivity (work/time period)

• Hard to determine

• Can fluctuate due to weather, learning time, etc.

• Need to know how well labor works

• p = Price of money elements ($/hour0• q = Productivity (units/hr)•  Unit labor = p/q = $/unit • 1/q = W (worker – hours/unit of output)

Hrs/Acre• Unit Labor = P x W $/unit• Total cost = Q x P/q = Q x P x W• Gives total labor cost for quantity Q• Hard to find q, P, W

Est and controlling $ Component

• $ depends on craft structure or Union• Regional and local autonomy of labor and

employer• Collective bargaining units• Wage rates, fringe, insurance, work rules and

exceptions• Federal, state and local taxes and laws• Wage and price control• Can estimate all hourly or direct – indirect

Basic Wages

• Vary by location, craft, work within craft, experience

• Need to know – Location and labor agreements– Types of crafts or perform work– Craft grades to do work and wage rate

• Contractor has no control over wages but needs to know cheapest person to do work

– unemployment ins.

Basic Wages

– Fringe benefits• Contractor wants to watch what the fringes are and

not overpay

• Insurance based on payroll

• Workman’s Comp (WC)

• FICA

• SDI – state disability and unemployment ins.

• Public Liability (PL)

• Property Damage (PC)

Basic Wages

• WC, PL, PC = rate/100 straight time equiv. Payroll $2-$40/$100– WC, PL, PC depend on accident history or contractor– Vary widely depending on classification of work

• FICA and SDI = % of gross wages• Taxes based on Payroll – Federal and state

withholding taxes• Wage Premiums – Overtime• Contractor can have huge effect on $ by watching

Overtime

Basic Wages

• Controlling Productivity– Productivity much more difficult to estimate– Factors influencing productivity – Qualitative

• Regional Variations– Training and experience and skill or labor pool– Work rules– Need basic productivity levels for various crafts then

use multipliers to go from region to region– Training and experience cannot be forecast but good

supers can hire and fire to improve productivity

• Environmental Effects– Effects of productivity– Ht above grade, heat, noise, light,

constructions, stability of work-station, dust, etc., weather

– Effects can be minimized by planning around seasons and using enclosures

Basic Wages

• Learning Curves– Skill and productivity with experience and practice – Should try and do all units at once to avoid unlearning

curve

• Work Schedule– How job can be done– No OT, scheduled OT– OT production is lower than 40 hr week production

• Importance of Worker Hours– Since wages vary, worker hours provide a look at how long

a job takes

Est different types of Const

• Building Construction– Means – Contractor’s may use Means for plus prices– Fair Cost est.

• Industrial Const.– No Means – must use own Database for labor

• Heavy Const.– Treat each bid item as separate entity– To find production = max production x job efficiency

factor x swing and depth factor x bucket load factor