What is cost estimation?
Probable total cost of a future activity
What is the purpose of cost estimation? (part A)
- Developing an initial project budget for an owner
- Determining project feasibility
- Designing the project within the owner’s budget
What is the purpose of cost estimation? (part B)
- Evaluating alternative designs
- Preparing bids
- Re-estimating for an addendum (change in scope during the bidding process)
What is the purpose of cost estimation? (part C)
- Substantiating claims and resolving issues
8. Preparing a payment schedule
What are the applications of approximate estimate?
1) Evaluating project feasibility
2) Evaluating cost of proposed design modifications
3) Establishing a preliminary budget for control purposes
4) Screening a number of alternative projects
How is an approximate estimate prepared?
Use only basic criteria such as :
Output
Total sqft
Number of units etc’
When is it good or not good to rely on an approximate estimate ?
Good:
1) Evaluation of design alternatives
2) Presentation of preliminary construction estimate to the owner
Not good:
Bid purposes
List the 4 components of a detailed estimate
1) Estimated cost (materials, labour, equipment, subcontract work)
2) General expenses (Overhead, tax, insurance)
3) Contingency (Risk analysis)
4) Profit ( Top level mgmt)
What is the basic approach to prepare detailed estimates?
- Identify work items to be completed
- Measure work items size
- Asses likely cost of work
(Identify + measure + evaluate cost) of work
What are the components of bid estimate (detailed estimate)?
Bid price = Cost estimate +Contingency +General exp + Profit
Name factors of contingency
- Experience on similar projects
- Season of construction
- Contract condition
- Project size
- likelihood of profit
What is traditional (design - bid - build) delivery?
The project is fully design before work begins
What is design-built delivery?
A single organization responsible for design and construction
What is construction management delivery?
Facilities overlap between project stages. The main objective is earlier completion
What is a public-private partnership?
- Long term contracts between the public and private sector
* Private sector will operate at first and then handover the asset to the public sector
Name 3 types of contracts
1) Lump-Sum contracts
2) Cost-plus contracts
3) Unit-price contracts
