Chapter 2:

Preliminary
Cost Estimating
• Introduction to cost estimating
• Method of estimating
• Unit method
• Floor area method
• Building volume method
• Approximate quantity
• Bills of quantity
• Elemental cost analysis method
By: AP Ts. Dr. Azeanita Suratkon &
Ts. Syed Burhanuddin Hilmi Syed Mohamad

By: Dr. Azeanita Suratkon

Introduction to Cost Estimating
• Definition:
“An estimate is an attempt to forecast the actual cost”
(Ostwald, P.F. (2001)

• A process to predict project costs and resources requirement.

• Estimating is a dynamic process.
• Factors considered in preparation of an estimate: current technologies,
marketplace demands on materials and labours, quantities of materials, etc.
• It requires a good data base of actual cost from past project experiences.
• As the project evolves, more information becomes available – more
accurate the estimations.
Introduction to Cost Estimating
Variation in type of estimate with changes in project stages
1. Preliminary Estimate
Identification
Appraisal Estimate
Appraisal
Project Stage

Proposal Estimate
Definition
Approved Estimate
Approval
Pre-tender Estimate Post-Contract
Implementation Estimate
Achieved Cost
Operation
Time
Introduction to Cost Estimating
Preliminary estimate
• An initial estimate at the
earliest possible stages.
• It is likely that no design data
will be available and that
there will be only a crude
indication of the project size
or capacity.
• It is likely to be of use in the
provisional planning of capital
expenditure programme.
Appraisal estimate
 Sometimes known as feasibility
estimates.
 These are directly comparable
estimates of the alternative schemes
under consideration.
 An appraisal estimate should include
all cost which will be charged against
the project in order to provide the
best estimate of anticipated total
cost.
Introduction to Cost Estimating
Proposal estimate Pre-tender estimate
• An estimate for the selected  A refinement of approved
scheme. estimate based on the definitive
• It is usually based on a design work using the
conceptual design and design information provided in the
study specifications tender documents which should
be used during bid evaluation as
Approved estimate a marker against which bids can
 A modified version of the proposal be assessed.
estimate to reflect the client's views
which intended to provide the basis
for project cost control.
 Introduction to Cost Estimating
Post-contract estimate
• A further refinement to reflect
the prices in the contract
awarded.
Achieved cost
 A record of the actual costs of the
job in order to review performance  As Completed Detailed Abstract
and provide data for future projects.
3 types of estimates (in Malaysian
Government)
 Preliminary Detailed Abstract
(PDA) – during design stage
 As Tendered Detailed Abstract
(ATDA) – after tender is awarded
(ACDA) – after completion of
work
 Methods of estimating
Unit Method
 The unit method is a single price
rate method based upon the cost Building Types Unit Cost
per functional unit of the
building. Hospital Cost per bed space
 This method is often regarded as Car parking Cost per car parking lot
a way of making a comparison
between buildings in order to Hotel Cost per room
satisfy the design team that the School Cost per pupil
costs are reasonable in relation to
other buildings of a similar Cinema Cost per seat
nature.
 Methods of estimating
Unit Method
 Total cost = cost per unit x number of units

 Example:

The current cost for a 100-bed hospital constructed is RM1,250,000. We

are asked to estimate a 125-bed hospital.
Solution:
Cost per-bed = RM1,250,000/100 = RM12,500/bed
New hospital cost = RM12,500/bed X 125 bed = RM1,562,500
 Methods of estimating
Floor Area Method
 The method is a single price rate
method based on the cost per
square meter of the building.
 The use of this method should be
restricted to the early stages of
the design sequence.
 Total cost = cost per square metre
x total building area
 The rules for calculating the area:
All length and breadth
measurements are taken from
the internal dimensions of
external walls.
No deduction is made for internal
walls, ducts,
lift shafts, stairwells, etc. – gross
internal floor area.
 Methods of estimating
Floor Area Method
 Example:

A computer lab with 336 thick

brick wall (measured from centre
to centre).
A similar computer lab was built
with a price rate of RM850/m2.

336 thick
Brick wall
Methods of estimating
Floor Area Method
 Solution:

Floor Area
=lxw
= [42 - 2(0.336/2)] x [10 - 2(0.336/2)]
= 41.664 x 9.664
= 402.64m2
Total Cost
= 402.64m2 x RM850/m2
= RM 342,244.00
 Methods of estimating
Building Volume Method
 This method is generally used for
multi-storeyed buildings.
 Total cost = volume of buildings x
rate/ unit volume.
 The rules for calculating the area:
All length and breadth
measurements are taken from
the external dimensions of
external walls.
 The rules for calculating the area
(cont’d):
Building height is measured from the top
of foundation to half-way up to the slope
of pitched roof or 0.6m of the flat roof.
Buildings with distinct types of
occupation should have corresponding
volumes assessed separately, for
example, car park areas, shopping areas
and office areas in a commercial
building.
Methods of estimating
Building Volume Method
Sloped/pitched roof : c + b + a/2 Flat roof : a + b + 0.6m
 Methods of estimating
Building Volume Method
Flat roof with parapet wall : c + d
 The rules for calculating the area
(cont’d):
Height of building with parapet
wall is measured from the top of
foundation to the top of the
parapet wall (without adding
0.6m)
 Methods of estimating
Building Volume Method
 Example:

A computer lab with 336 thick

brick wall (measured from
centre to centre).
A similar computer lab was
built with a price rate of
RM120/m3.

336 thick
Brick wall
 Methods of estimating
Building Volume Method
 Solution:

Volume
=lxwxh
= [42 + 2(0.336 / 2)] + [10 + 2(0.336 / 2)] + [1.20 + 4 + 1/2(3)]
= 42.336 x 10.336 x 6.7
= 2931.82 m3
Total Cost
= 2931.82m3 x RM120/m3
= RM351,818.40
Methods of estimating
Approximate quantities
 This method is regarded as the most reliable and accurate method of
estimating, provided that there is sufficient information (such as
drawings and specifications) to work on.
 One of the measurement rules is to group together items
corresponding to a sequence of operations and relating them to a
common unit of measurement.
 Composite rates are then built up from the data available for that
sequence of operations.
 Methods of estimating
Approximate quantities
 Upper floor of a building
is measured in m2 Floor finishes
to include the
following items: Upper floor
- concrete layer
- damp proof Damp proof
membrane membrane
- floor finishes Reinforcement
- reinforcement bar bar/fabric
/fabric Lower
- formwork etc.. ceiling finishes
Methods of estimating
Bill of quantities
 It provides the most accurate estimate.
 All quantities for each work element will be measured and multiplied with
price rate.
Item Description Unit Qtty. Rate Total
(RM) (RM)
A Excavate trench for strip m3 325 1.50 487.50
foundation not exceeding 1.50 m
depth from formation (reduced)
level and remove excavated
material from site.
Methods of estimating
Finishes
Bill of quantities Internal Wall Finishes
Internal Floor Finishes
Examples of building work elements in BQ: Internal Ceiling Finishes
Substructure External Finishes
Piling Fittings and Furnishings
Work Below Lowest Floor
Services
Superstructure Sanitary Appliances
Frame
Upper Floor Plumbing Installations
Roof Air Conditioning System
Stairs Electrical Installation etc.
External Wall
Windows and External Doors External Work
Internal Wall and Partitions Earthwork
Internal Doors Drainage
Parking etc.
 Methods of estimating
Elemental Cost Analysis (ECA)
 ECA can be defined as “a systematic  To assess whether a balanced
breakdown of the cost of a building distribution of costs have been
to a client into the various building / achieved amongst the various
construction elements in terms elements of the building.
which are meaningful to both the
 To provide comparison of costs of the
client and the member of design
same elements that may be used in
team.”
different buildings.
 To enable the Design Team to
 To obtain cost data for use in the cost
determine how much had been
planning for other projects.
spent on each building element.
Methods of estimating
Elemental Cost Analysis (ECA)
 METHOD OF RELATING PROPOSED PROJECT TO ANALSYED EXAMPLE

 Elemental cost of external walls on proposed project:

Analysed example
Total floor area 5,000m2 Proposed project
External wall area 4,000m2
Total floor area 4,800m2
Wall /floor ratio 0.80
Cost of external wall per m2 of floor External wall area 3,600m2
area (elemental cost) = RM37.50
Cost of external wall per m2 of wall
(unit cost) = RM46.875
Methods of estimating
Elemental Cost Analysis (ECA)
 METHOD OF RELATING PROPOSED PROJECT TO ANALSYED EXAMPLE

 Elemental cost of external walls on proposed project:

UNIT COST METHOD PROPORTION METHOD

3600m2 of wall at $46.875 Wall/floor ratio = 3600/4800
= $168,750.00 = 0.75
$168,750/4,800 = $35.156 $37.50 x 0.75/0.80 = $35.156

(Total cost 4,800 x $35.16 = $168.750)