1.

APPROXIMATE ESTIMATE

This is also known as preliminary/rough estimate. This estimate is prepared to work-out an

approximate cost of the project in a short period without going into details. This estimate is done
for preliminary financial evaluation of different alternatives and for administrative sanctions.

Importance

Approximate estimate is prepared with preliminary investigation and survey. It does not require
detailed surveying design, drawing etc. It is basically done to evaluate feasibility of a project. If
it is observed from approximate estimate that the cost of the project is very high then the project
may be abandoned without preparing a detailed estimate.

Approximate estimate provides an idea about the cost of the project, which enables the
authority to check the feasibility of the projects considering the funds available for the project.

Methods of Approximate Estimate

Project comparison method

A project comparison estimate is prepared by comparing the proposed project to one or more
similar projects that the company has built. The estimator starts with the costs for a similar
project and then adjusts these costs for any differences between the comparison project and the
proposed project. When comparing the project to multiple projects, the cost of the proposed
project should be calculated for each comparison project, and then the estimator uses his best
judgment as to which of the costs is most accurate.

When preparing a project comparison estimate, the estimator must make sure that the projects
are very similar in both design and use. It is obvious that one cannot use the costs from a
warehouse to determine the costs of a school.

Very little information is required about the planned structure except that the following general
characteristics should be known:

1. Use — school, office, hospital, and so on

2. Kind of construction — wood, steel, concrete, and so on

3. Quality of construction — cheap, moderate, top grade

4. Locality — labor and material supply market area

5. Time of construction — year

Example 1
Example 2 -project comparison

Last year your construction company built a 70,000-sf warehouse for $6,203,595. The owner
wants to build another warehouse of similar size; this time they want to add 1,000 sf of office
space in one corner of the building. It is estimated that the offices space will cost $100,000 and
that costs have risen 3 percent during the last year. Using this information, prepare a preliminary
estimate for the new warehouse.

When collecting data for use in project comparison, it is important that any unusual conditions
that would skew the costs higher or lower be documented. It is simply not enough to record just
the cost. The estimator must know whether the cost is typical for the type of project and
understand why the cost might have been higher or lower than the average.

Square-Foot or Floor Area estimating

Square-foot estimates are prepared by multiplying the square footage of a building by a cost per
square foot and then by adjusting the price to compensate for differences in the design. Units
other than square footage may be used; for example, a parking garage may be measured by the
number of parking stalls. The cost per square foot or other unit may be determined by dividing
the cost by the size of the building.

Example 1

Solution

Firstly, Determine the historical cost per square foot.

Next, calculate the total cost for the new project.

Example 2 square-Foot Estimate

Last year your construction company built a 100,000-sf, 5-story parking garage for $5,395,621.
The parking garage included one elevator, which cost $126,345, and its costs are included in the
$5,395,621. Using this information, prepare a preliminary cost estimate for a 95,000-sf, 5-story
parking garage with two elevators. It is estimated that costs have risen 3 percent during the last
year.

Determine the cost per sf for the parking garage, excluding the elevator.

Solution

The square-foot method may be used for the entire project or just specific trades within the
project. For example, we may prepare a square-foot estimate for the electrical to check our
electrical pricing

Cubic Foot of Volume Method

This method accounts for an additional parameter that affects cost: floor-to-ceiling height.

Example

The same as example 1 of the preceding method, except that the following ceiling heights are
given:
Solution

First Determine the historical base cost.

Next, determine the total cost for the new warehouse structure.

Parametric Estimating/Panel Method

This method employs a database in which key project parameters, project systems, or panels (as
in the case of buildings) that are priced from past projects using appropriate units are recorded.
The costs of each parameter or panel are computed separately and multiplied by the number of
panels of each kind. Major unique features are priced separately and included as separate line
items. Numerous parametric systems exist for different types of projects. For process plants, the
process systems and piping are the parameters. For buildings, various approaches have been
used, but one approach to illustrate the method is as follows:

Each of these items would be estimated separately by applying the historical cost for the
appropriate unit for similar construction and multiplying by the number of units for the current
project. This same approach is used on projects such as roads.
Bay Method

The rate for one additional bay is calculated. Then the approximate estimated cost for the
building is worked out by multiplying the number of bays in the proposed building with the cost
of one such bay. This method is appropriate for buildings or projects that consist of a number of
repetitive or similar units.

In the plan view of a warehouse building shown in Fig. 1.1, the building is made up of three
types of bays. The only difference between them is the number of outside walls. By performing a
definitive estimate of the cost of each of these bay types, an appropriation estimate can be made
by multiplying this bay cost times the number of similar bays and totaling for the three bay types.

Example

We know from a definitive estimate that the cost of the three bay types is as follows:

Type I = $90,000

Type II = $120,000

Type III = $150,000

Determine the cost for the building structure and skin (outer surface).

After applying the bay method for the overall project, the estimate is modified by making special
allowances (add-ons) for end walls, entrances, stairs, elevators, and mechanical and