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Cost Estimation
Cost Estimation
Institute of Integrated Electrical Engineers of the Philippines, Inc. Council of Student Chapters (IIEE-CSC) 10th MEGA SEMINAR
February 7, 2007 10:30am-12:00nn, University of Sto. Tomas
About
The Speaker
FLORIGO C. VARONA
Professional Electrical Engineer
VALUE-ZEN
MECHANELEC CONSTRUCTION, INC. A Management and Technical Consultant Conducting Technical Audit as well as providing Management and Technical advice and solution to clients like PRUDENTIAL LIFE, WALTERMART, KINGS COURT, CLEAN LIVING, ASIA FUSION EQUIPMENT, & others.
FLORIGO C. VARONA
Professional Electrical Engineer
VALUE-ZEN
MECHANELEC CONSTRUCTION, INC. A Management and Technical Lecturer of Project Management Series at IIEE, SPECS, UP-NEC, CMDF, and other companies in the construction industries. Senior Course on Building Construction Management sponsored by Japan International Cooperation Agency (JICA) for project managers in Asia-Pacific region in six (6) consecutive years.
FLORIGO C. VARONA
Professional Electrical Engineer
VALUE-ZEN
MECHANELEC CONSTRUCTION, INC. A member of TESDA-SPECS Panel of Expert who prepared the Occupational Skills Standard as well as the Competency Assessment Instrument for the Electrical Construction Sector. A Professional Electrical Engineer since 1985 backed up by 30-years combined work experience in design, construction, maintenance, and training.
The objective of
Course Outline
1.0 Introduction 2.0 Purpose of Estimating & Costing 3.0 Importance of Detailed Costing 4.0 Estimating Phases in a Project Cycle 5.0 Steps in Preparing Cost Estimate 6.0 Types of Estimates and Their Costing
Introduction
COST ESTIMATES A forecast of future project cost prepared to ensure success of project undertaking - particularly financial success.
COST ESTIMATES A basis for approving an economical and reasonable budget needed to complete the project on time with required quality. [Proponents and Owners]
COST ESTIMATES A basis for endorsing a realistic and reasonable budget acceptable to the owner without sacrificing public safety in compliance with codes & regulations [Designers]
COST ESTIMATES A basis for declaring BID PRICE that is acceptable to the client with reasonable profit. [Contractors]
COST ESTIMATES A basis for requesting BUDGET necessary to perform construction activities in conformance with quality and delivery requirement. [Project Engineers]
There are several purposes in estimating and costing --depending on point of view of-Proponents/Owners Designers Contractors Project Engineers
Proponents/Owners Point of View To establish a reliable and dependable Cost Estimate that will serve as a basis for awarding the project to qualified contractor.
For proponents and owners with reliable and accurate estimate, Bid Price is gauge how close it is to reality of completing the project on time without sacrificing quality.
The objective of estimating is to declare the right budget for the project to be completed on time without sacrificing quality. A budget acceptable to contractors that is economical and reasonable.
Contractors Point of View To establish a realistic and accurate Price with greater chance of winning the bid and gaining reasonable profit.
Winning the project without gaining profit is a losing proposition. On the other hand, ensuring greater profit without winning the project is a futile exercise.
The objective of estimating is to declare the right price for each work item. A price acceptable to the client with reasonable profit.
Designers Point of View To establish alternative budget options that is realistic and acceptable to owners without sacrificing Public Safety.
For designers with realistic and reasonable estimate, Owners Budget is gauge how close it is to reality of ensuring Public Safety and complying Codes and Regulations.
The objective of estimating is to endorse the right budget for the project without sacrificing public safety and code compliance. A budget acceptable to owners that is realistic and reasonable.
Project Engineers Point of View To establish alternative budget options that is realistic and reasonable to company without sacrificing Quality and Delivery.
For engineers with realistic and accurate estimate, Companys Budget is gauge how close it is to reality of ensuring the project will be completed on time without sacrificing quality.
The objective of estimating is to endorse the right budget for the project to be completed on time with the required quality. A budget acceptable to the company that is realistic and reasonable.
For owners, knowing the budgetary requirement is a must. It is necessary for making a -GO or NO GO decision.
With costing in design options, the owner is able to study not only the quality behind But also the cost implication for such option.
The management can plan for cost appropriation, if cost of work is clear. Budget approval would be easier --eventually.
For contractors, cost estimating is necessary in coming up with the most reasonable price with greater chance of winning the bid and gaining good profit.
With cost details, monitoring and control is easier to implement. Cost Performance Evaluation can be done quickly to assess savings or cost over run.
Without Cost Estimates, billing would be unreliable. Worst, it might become unrealistic that the client will seek further justification.
In detailed costing, work items are declared with clear and definite costing per time interval. Time scaled costing serves as a basis for Progress Evaluation.
Change Orders and Extra Works have to be quantified and given costing prior to execution. Approved Detailed Costing is necessary before working.
After completing the project, final costing is done to reflect profit. The final cost becomes part of cost information needed as reference of future project.
It serves as a basis for sizing up whether financial standing is sufficient or not. Most appropriate during Conceptualization Stage.
It serves as a basis for cost allocation of major work items. Most appropriate during Project Definition Stage.
Estimates are more accurate when material specifications and bill of quantities are known. Most appropriate during Project Planning Stage.
An estimate that is focused on winning the bid and gaining profit. Most appropriate during Project Tendering Stage.
An estimate that is focused on establishing cost control as well as maximizing profit. Most appropriate during Pre-planning Stage.
An estimate that is focused on optimizing resources, productivity and cost savings. Most appropriate during Project Execution Stage.
Step #1
Step #1
Apply 5W2H.
First W
Second W
Third W
Fourth W
Stands for WHEN? (When to submit the bid?) (When to start and finish the project?)
Know the deadline in order to submit the bid on-time. Determine when to start and finish the proposed project.
Fifth W
Knowing this hidden WHY? is a plus factor. It answers the quality, delivery and cost requirement.
First H
Knowing the STEP is... knowing the quality, delivery and cost component of the WORK.
Second H
Stands for HOW MUCH? (How much is the cost of the project?)
Knowing how much... is the approved budget ... is a plus factor.
DECLARED OR NOT... you must have an idea to make the estimate realistic.
5W2H
WHO? WHAT? WHERE? WHEN? WHY? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT? WHERE? WHEN? WHY? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE? WHEN? WHY? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE IT IS LOCATED? WHEN? WHY? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE IT IS LOCATED? WHEN TO START/FINISH? WHY? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE IT IS LOCATED? WHEN TO START/FINISH? WHY DO THE PROJECT? HOW? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE IT IS LOCATED? WHEN TO START/FINISH? WHY DO THE PROJECT? HOW IS IT UNDERTAKEN? HOW MUCH?
5W2H
WHO IS THE OWNER? WHAT IS THE PROJECT? WHERE IT IS LOCATED? WHEN TO START/FINISH? WHY DO THE PROJECT? HOW IS IT UNDERTAKEN? HOW MUCH IS THE COST?
Step #2
Step #2
Completeness of Plans.
Ensure the details are clear.
ELECTRICAL PLAN
LIGHTING LAYOUT POWER LAYOUT AUXILIARY LAYOUT SCHEDULE OF LOADS ONE-LINE DIAGRAM RISER DIAGRAM SYMBOLS & LEGEND
OTHER PARTS OF
ELECTRICAL PLAN
MOUNTING DETAILS WIRING DIAGRAM SCHEMATIC DIAGRAM
TECHNICAL SPECIFICATION
SCOPE OF WORK CODES, PERMITS GUARANTEE MATERIALS
ELECTRICAL MATERIALS
WIRES CONDUITS BOXES & FITTINGS LIGHTING FIXTURE WIRING DEVICES PANELS & BREAKERS AUXILIARY DEVICES
TECHNICAL SPECIFICATIONS
EW 101: SCOPE The work to be done by the CONTRACTOR under this division consists of furnishing all labor and materials required completing and making ready for use the following items in accordance with the specifications and drawings. .General Lighting System .Stalls Individual Electrical Power System .(MECO) Electric Meter Center .Submeters for Tenants (temporary power provisions)
EW 102: CODES, PERMITS, CERTIFICATE OF INSPECTION AND APPROVAL: 102.1 The installation specified herein shall comply with the provision of the latest approved edition of the Philippine Electrical Code with all laws and regulations of local authorities having jurisdiction over electrical installations, and with all rules and requirements of the local power company. 102.2 The Contractor, prior to the start of the work, shall obtain at his own expense, all permits required by the government approving Authorities and, after completion of the work, shall furnish the Owner a copy of the Certificate of Final Inspection and Approval from the above authorities. The Contractor shall pay all penalties incurred by him or his agents.
EW 104: MATERIALS All materials shall be new and shall conform to the Standard of the Underwriters Laboratories and shall comply with the specifications, unless specifically accepted and all materials where not specified shall be of their respective kind. Samples of any materials shall be submitted for approval as required by the Project Architect.
EW 105: WIRE 105.1 All wire shall be copper, soft-drawn and annealed, shall be of 90% conductivity, shall be smooth and true of a cylindrical form and shall be within 1% of the actual size called for. 105.2 No wire shall be smaller than 2.0 sq. mm. except for control leads, plastic insulated for 600 volts working pressure, type THW insulation and shall be as manufactured by Phelp Dodge or Duraflex.
CAUTIOUSLY STUDIED IS
GENERAL REQUIREMENT
PERMIT & LICENSES Mobilization DEMOBILIZATION Insurance, Coverage, Bonds UTILITIES & SECURITIES Temporary Facilities AS-BUILT PLANS/DRAWINGS Others needed prior to operation
BILL OF QUANTITIES
Unit of Measurement Details of BOQ Summary of BOQ
Step #3
Step #3
ON-SITE VISIT
Transportation UTILITIES Local Government Requirement EMERGENCY SERVICES Vendors & Suppliers Capability SECURITY Local Climatic Condition Project Site Situation
ACTUAL CONDUCT OF
ON-SITE VISIT
Is really very necessary to come up with more accurate, more realistic, And above all, most reasonable but profitable estimate.
Step #4
Step #4
ESTIMATE DATA
Latest Material Pricing UPDATED PRODUCTIVITY MEASUREMENT Current Project Performance RESOURCE UTILIZATION SWOT Analysis
RESOURCE UTILIZATION
Manpower Utilization EQUIPMENT UTILIZATION Material Utilization
SWOT Analysis
STRENGTH Weakness OPPORTUNITY Threat
ESTIMATE DATA
Is really very necessary to come up with more accurate, more realistic, And above all, most reasonable but profitable estimate.
Step #5
COST ESTIMATE
Identify Sub-con Items SECURE SUB-CON PRICES Verify Track Record/Capability CONTACT SUPPLIERS Review Insurance, Bonding REVIEW WAGE POLICY Prepare Work Breakdown Structure DEVELOP TAKE-OFF SHEET
BREAKDOWN OF WORK
Roughing-in Works WIRING WORKS Wiring Device Installation FIXTURE MOUNTING WORKS Equipment Mounting & Installation AUXILIARY WIRING WORKS Auxiliary Device Installation TESTING & COMMISSIONING
Suggestion in
MATERIALS
Transport Expense HANDLING EXPENSE Storage Expense WASTE & LOSSES Value Added Tax MISCELLANEOUS EXPENSE
LABOR
SSS Pag-ibig MEDICARE Cost of Living Allowance 13th MONTH PAY Bonus HOLIDAY PAY Other Compensation
COST SUMMARY
DIRECT COST Job Overhead Expenses GENERAL OVERHEAD Project Cost PROFIT Total Cost CONTRACTORS TAX Bid Cost
PROJECT : SUPPLY AND INSTALLATION OF CLI SERVICE ENTRANCE OWNER : CLEAN LIVING INC. LOCATION : Tunasan, Muntinlupa CONTRACTOR : VALUE-ZEN/FCVARONA CONSULTANCY SERVICES DETAILED COST ESTIMATE ITEM DESCRIPTION QNTY. UNIT UNIT COST TOTAL COST
1.00 One (1) unit CONCRETE PEDESTAL dimension: 300 x 450 x 2000mm on top of CLI Perimeter wall (includes form, rebar, and concreting works) 1.10 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 1.1.7 1.1.8 MATERIALS Cement Sand Gravel Tie Wires Coco lumber Plywood 1/2" x 4' x 8' Rebar #3 Rebar #5 Sub-total of 1.10 1.20 LABOR 1.2.1 Labor 1.2.2 Steel man
180.00 250.00
720.00 250.00
: VALUE-ZEN INC. / FCVARONA CONSULTANCY SERVICES : Proposed Renovation of Caltex Clubhouse (ELECTRICAL WORKS) : San Pascual, Batangas : CALTEX (Philippines) INC. BILL OF QUANTITIES
ACTIVITIES A. Labor & Materials I. Mobilization II. Preparatory Works III. Roughing-in works
II.1 80mm dia. RSC Pipes & Acc. II.2 25mm dia. RSC Pipes & Acc. II.3 20mm dia. RSC Pipes & Acc.
V. Panelboards
IV.1 500A DPDT Switch IV.2 500A MDP w/ 32 Branch 1.0 set 1.0 set
PROJECT : ELECTRO-MECHANICAL WORKS FOR PRUDENTIAL BANK BUILDING PROJECT OWNER : PRUDENTIAL BANK/UNICORN CONSTRUCTION LOCATION : Grace Park, Caloocan City CONTRACTOR : VALUE-ZEN ELECTRO-MECHANICAL SPECIALISTS CO. / FCVARONA CONSULTANCY BILL OF QUANTITIES ITEM DESCRIPTION ELECTRICAL WORKS ROUGH-IN BOXES & FITTINGS 1.00 Materials
1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.10 1.10 1.11 1.12 1.12 1.13 1.14 1.14 1.14 1.15 40mm 80mm 40mm 80mm 40mm 80mm 40mm 80mm 15mm 20mm 25mm 50mm 15mm 20mm 25mm 15mm 20mm 25mm 50mm 15mm dia. IMC Pipe (MATSUSHITA) dia. IMC Pipe (MATSUSHITA) dia. IMC Elbow dia. IMC Elbow dia. IMC Coupling dia. IMC Coupling IMC Locknut & Bushing IMC Locknut & Bushing dia. EMT Pipe (MATSUSHITA) dia. EMT Pipe (MATSUSHITA) dia. EMT Pipe (MATSUSHITA) dia. EMT Pipe (MATSUSHITA) dia. EMT Elbow dia. EMT Elbow dia. EMT Elbow dia. EMT Coupling dia. EMT Coupling dia. EMT Coupling dia. EMT Coupling EMT Connector
QNTY.
UNIT
UNIT COST
TOTAL COST
%WT.
I.
38.00 9.00 25.00 4.00 50.00 15.00 50.00 15.00 345.00 160.00 20.00 10.00 345.00 160.00 20.00 345.00 160.00 20.00 10.00 690.00
lengths lenghts pcs. pcs. pcs. pcs. pcs. pcs. lengths lenghts lenghts lenghts pcs. pcs. pcs. pcs. pcs. pcs. pcs. pcs.
723.69 2,003.75 312.50 1,125.00 93.75 112.50 6.44 13.19 122.06 185.19 222.23 555.56 25.94 37.13 44.55 7.13 11.25 22.50 56.25 6.44
27,500.13 18,033.75 7,812.50 4,500.00 4,687.50 1,687.50 321.88 197.81 42,111.56 29,630.00 4,444.50 5,555.63 8,948.44 5,940.00 891.00 2,458.13 1,800.00 450.00 562.50 4,441.88
1.12 0.73 0.32 0.18 0.19 0.07 0.01 0.01 17.06 12.01 1.80 2.25 3.63 2.41 0.36 1.00 0.73 0.18 0.23 1.80
PROJECT : ELECTRO-MECHANICAL WORKS FOR PRUDENTIAL BANK BUILDING PROJECT OWNER : PRUDENTIAL BANK/UNICORN CONSTRUCTION LOCATION : Grace Park, Caloocan City CONTRACTOR : VALUE-ZEN ELECTRO-MECHANICAL SPECIALISTS CO. / FCVARONA CONSULTANCY LUMP SUM PRICE BREAKDOWN ITEM I. DESCRIPTION Rough-in Boxes & fittings LABOR 80,445.00 3.27 56,250.00 2.29 52,400.00 2.13 45,000.00 1.83 27,450.00 1.12 22,844.32 0.93 10,850.00 0.44 70,000.00 2.85 365,239.32 14.85 EQPT/MATLS 300,344.56 12.22 239,696.25 9.75 246,804.75 10.04 259,543.75 10.56 107,214.00 4.36 419,024.25 17.04 32,062.50 1.30 120,000.00 4.88 1,724,690.06 70.15 PROFIT/OH 67,198.16 2.73 52,225.81 2.12 52,800.84 2.15 53,743.01 2.19 23,764.24 0.97 77,976.81 3.17 7,572.79 0.31 33,529.41 1.36 368,811.07 15.00 TOTAL 447,987.72 18.22 348,172.06 14.16 352,005.59 14.32 358,286.76 14.57 158,428.24 6.44 519,845.38 21.14 50,485.29 2.05 223,529.41 9.09 2,458,740.45 100.00
II.
III.
IV.
V.
Wiring Devices
VI.
VII.
Telephone System
VIII.
CONTRACTOR PROJECT LOCATION DATE ITEM I 1.1 1.2 1.3 1.4 1.5 II 2.1 2.2 2.3 2.4 2.5 2.6 2.7 III IV
: : : :
VALUE-ZEN EMS COMPANY 2 STOREY RESIDENCE WITH ATTIC MUNTINLUPA CITY FEB. 10, 1999
BILL OF QUANTITIES
DESCRIPTION GENERAL PROVISIONS Mobilization/ demobilization Temporary Facilities Permits & Licenses Bonds & Insurance Power, water, illumination, Misc. Sub-total I SITE WORK Clearing & Grabbing Excavation Backfilling & Compaction Gravel Fill & Compaction Hauling & Disposal of excess soil Termite Treatment Others. Sub-total II FORMWORKS REBARWORKS QNTY 1.00 1.00 1.00 1.00 1.00 UNIT lot lot lot lot lot UNIT COST PHP 50,000.00 50,000.00 45,000.00 21,000.00 40,000.00 AMOUNT PHP 50,000.00 50,000.00 45,000.00 21,000.00 40,000.00 206,000.00 42,412.50 68,250.00 39,106.50 22,054.50 53,040.00 75,000.00 25,000.00 324,863.50 579,301.50 647,062.50
BEST BID.
Having the maximum marked-up that could be inserted in a bid. The mark-up is usually based on mathematical computation as well as extra-sensory calculation focused on winning and gaining.
In conclusion
A BID WINNER
Could release the right bid proposal, at the right price, at right time and place. Just like a martial art champion releasing the right strike at the right time at the right point.
Types Estimates
Ratio Estimate (25% Accurate)
Used in Feasibility Study.
Thank you!