CONSTRUCTION COST

ENGINEERING
PRAYER BEFORE THE CLASS

Our most gracious and Heavenly Father, we praise

and thank you for this day. Watch over us as we go
about our work and studies. Fill our minds with
knowledge and help us understand the topic that we
are going to tackle today. Bless us, Father, with your
wisdom as we begin our class. Help us in every way
so that we may become the children you want us to
be. Amen
INTRODUCTION TO CONSTRUCTION
COST INCLUDING ITS TYPES,
PRELIMINARY ESTIMATES AND UNIT
PRICES

Apply and Analyze the Construction Cost

Assessment Task
1 quiz
1 assignment
1 seatwork/ practical problem
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES

Construction Cost

Construction Cost means the total cost of the work to the owner of all elements of
the project designed or specified by the design professional including the cost at
current market rates of labor and materials furnished by the owner and equipment
designed, specified or specifically provided by the design professional. Construction
costs shall include the costs of management or supervision of construction or
installation provided by a separate construction manager or contractor, plus a
reasonable allowance for each construction manager’s or contractor’s overhead and
profit.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Types of Construction Project Cost
1. Fixed Cost
This is defined as the cost spent once for a particular point of time. The purchase
of equipment, machinery etc comes under fixed cost assets.
2. Time-Related Cost
Time-related cost is the cost spend for a particular activity for a given duration. The
cost spent on wages, equipment and building rents etc comes under this category.
3. Quantity -Proportional Cost
This type of cost will vary based on the quantities. Materials costs are examples of
quantity-proportional costs. Major classification of construction projects costs
are:
1.Project direct costs
2.Project Indirect Costs
Total Project Cost = Project Direct cost and Project Indirect Cost
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES

Project Direct Cost

The costs and expenses that are accountable directly on a facility,
function or product are called as direct costs. In construction
projects, the direct costs are the cost incurred on labor, material,
equipment etc. These costs for a construction project are developed
as estimates by means of detailed analysis of the contract activities,
construction method, the site conditions, and resources. Different
direct costs in construction projects are material costs, labor costs,
subcontractor costs, and equipment costs.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Project Indirect Cost
The costs, unlike direct costs, is not directly accountable for a particular
facility, product or function. Indirect costs can be either variable or fixed.
The main sections coming under indirect costs are personnel costs,
security costs, and administration costs. These costs do not have a direct
connection with the construction project. The indirect cost can be
classified as:

1. Project Overhead Cost

2. General Overhead Cost
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Project Overhead Cost
Project overhead costs can either be fixed or time-related costs.
Different costs coming under overhead costs are the costs of stores,
safety facilities, workshops, offices, staffs and parking facilities. All those
plants that are required to support the working crews will come under
this cost. The overhead cost is estimated by a detailed analysis of the
site-related activities and their cost. Hence an accurate cost estimate is
obtained.

Most of the companies make use of forms and checklist developed by

them to estimate these costs. The site overhead costs account for 5 to
15% of the total project costs.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
General Overhead Cost
The general overhead costs cannot be directly charged for a specific
project. These form the costs that are used to support the overall activities
of the company. The general overhead costs will include the cost of the
design engineers, expenses of head-office, cost of directors and
managers, schedulers etc. The general overhead expense and cost are
found reasonable through continuous monitoring of the company
expenses. The general overhead costs account for 2 to 5 % of the contract
direct costs.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES

Preliminary Estimates

A preliminary estimate is the approximate cost of the

project that is calculated at the conceptual stage of the
project. When the project drawings and specifications are not
available, a preliminary estimate is prepared. It forecasts the
total budgeted cost of the specific construction project. Apart
from new construction, It can also be prepared for demolition
or renovation works.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES

Preliminary Estimates

Depending upon the type of infrastructure, the estimation technique and units
may change.

1.For buildings: The rate per square foot/per cubic foot/per room/per
occupant is given
2.For Roads and Highways: The rate per Km is provided depending upon
the thickness of layers and the type of construction material.
3.For Irrigation channels: The cost per Km is given. It can also be based on
a per hectare basis (area irrigation by the canal/water channel)
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Preliminary Estimates
The preliminary cost estimate of buildings is based on areas and length measurements of various
elements of the structure. Moreover, the total square footage of the plot is also considered to get the
approximate cost for building the house, plaza, or multi-story building. Most of the clients require the
preliminary budget estimate from contractors and It helps to get a rough idea about the total
expenses for the completion of the project. So we can say that it is based on:
•Total square footage of building
•Linear Measurements (walls etc.)
•Area Measurements (Rooms, Floors, etc)
This is followed by a detailed estimate that includes a list of all the construction materials along with
the specifications. The detailed BOQ can be priced based on the cost of each line item
including masonry estimate, concrete estimate, etc. and the total budget amount for the construction
can be estimated precisely in this way. The quantity takeoff sheet can be priced easily by putting the
unit cost and most of the clients require such cost filled BOQ’s from contractors.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Preliminary Estimates

You might be wondering that why clients need this initial

estimate from the contractor? The following are the major
reasons:
1.To get rough idea about total construction cost
2.Get beforehand information regarding the major material
required
3.Helps in quick planning and initial execution of project
4.Helps in managing the project budget and costs
5.Allows the clients to choose the best contractor
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Unit Prices

Unit price is the price at which a single quantity of a product

is being sold. This can refer to the price per unit of measure,
such as the price per pound, ounce, or pint. The price per
unit of measure is frequently listed on the shelves in a
supermarket, so that shoppers can comparison shop among
the different brands of products on display. The concept is
also used in bulk pricing, to assist purchasers in determining
the best possible deal.
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Unit Prices

A unit price is the price for one item or

measurement, such as a pound, a kilogram, or a
pint, which can be used to compare the same type
of goods sold in varying weights and amounts.
Multiple pricing is selling two or more of the same
item at a price that is lower than the unit price of a
single item
INTRODUCTION TO CONSTRUCTION COST INCLUDING
ITS TYPES, PRELIMINARY ESTIMATES AND UNIT PRICES
Unit Prices

A buyer is offered a quote of (OFFER A) Php

2731770.50 for 1,200 units, (OFFER B) Php
3130120.10 for 1600 units, (OFFER C) Php
4000530.03 for 2500 units, and a quote of Php
4043020.00 for 1,800 units. If you were the buyer ,
what option will you choose?
NEXT MEETING…

Quiz No. 1 – September 1

Thank you!
PRAYER AFTER THE CLASS

Our most gracious and heavenly Father, Lord, thank

you for
giving us the opportunity to learn and the capacity to
understand. Let our knowledge be of service not only
for the
attainment of our goals but also for the benefit of
others.
Amen