CE 6050

Construction Cost Estimating

Construction Cost Estimating Overview

By

Samer Alsharif Ph.D., PMP

Class Outline
• Construction Cost Estimate
• Components of Cost Estimate
• Types of Construction Cost Estimates
• The Estimator
• Sources of Estimating Information

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 Construction Cost Estimate

• What is Cost Estimate?

 It is the best determination or approximation…Guess!!!

that defines the cost of construction activities prior to
the commencement of work

 It is the process of analyzing a specific scope of work

and predicting the cost of performing the work.

Construction Cost Estimate

• What is Budget?

 When contract is awarded: the cost estimate will

become the baseline for cost control and will represent
the budget for that contract
 The budget includes all Cost Breakdown Structure
(CBS) elements

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 Construction Cost Estimate
• Components of Cost Estimate

 Direct Cost (construction cost)

 Self Preforming
 Labor
 Materials
 Equipment
 Tools
 Subcontractors
 Suppliers / Vendors

Construction Cost Estimate

• Components of Cost Estimate

 Indirect Cost (overhead cost)

 General Conditions
 Overhead (home office)
 Bonds
 Insurances
 Permits
 Taxes

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 Construction Cost Estimate
• Components of Project Budget

 Direct Cost
 Indirect Cost
+
 Profit
 Contingency
=
BUDGET

Construction Cost Estimate

• Uses of Cost Estimate
 Determine project budget for the owner
 Project feasibility
 Designing the project within the owner’s budget
 Evaluating different design concepts (Value
Engineering)
 Preparing Bids
 Preparing Cost Proposals
 Establishing project budget (contracts)
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 Construction Cost Estimate
• Uses of Cost Estimate
 Cost Impacts of Change Orders
 Claims
 Schedule of Values
 Aids in the procurement process
 Cost controlling
 Creating historical cost databases (Feedback for
future cost estimates

Types of Construction Cost Estimate

• The type of estimate prepared is based on….
• The amount of time and when…
• The required level of accuracy… %5, 10%, 25%
• The amount of information that is available …

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 Types of Construction Cost Estimating
• Conceptual Cost Estimate
 Project Comparison Estimates
- Prepared by comparing the cost of a proposed project
to a completed project
- Estimates are adjusted based on cost indices (cost of
similar projects) for location and timing
 Model Estimating
- Prepared by using computer models to prepare an
estimate based on a number of questions answered by
the estimator (length, width, height, roof type, etc.)
- Similar to assembly estimating, but it requires less
input from the estimator
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Types of Construction Cost Estimating

• Conceptual Cost Estimate
 Example: Project Comparison Estimates
- 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 the owner
wants to add a 1,000 sf of office space. It is estimated that
the office space will cost $100,000 and that the costs have
risen 3 % during the last year. Using this information,
prepare a conceptual estimate for the new warehouse
- Cost = $6,203,595 x 1.03 + $100,000 = $6,489,703

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 Types of Construction Cost Estimating
• Conceptual Cost Estimate
 Square-Foot Estimates (Rough Order of Magnitude)
- Prepared by multiplying the square footage of a
building by a cost per square foot
- Then adjusting the price to compensate for differences
in the building heights, length of the building
perimeters, and other building components.
- Helpful to check whether the project, as designed, is
within the owner’s budget
- RSMeans publishes annual guides (such as Square
Foot Costs) that contain a range of unit costs for a wide
variety of building types
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Types of Construction Cost Estimating

• Conceptual Cost Estimate
 Example: Square-Foot Estimates
- Last year your construction company built a 100,000 sf five story
parking garage for $5,395,621. The parking garage included one
elevator which cost $126,345 which is included in the price.
Using this information, prepare a conceptual estimate for a
95,000 sf five story parking garage with two elevators. It is
estimated that cost have risen 3% during the last year.
- Cost per sf = ($5,395,621 - $126,345) / 100,000 = $52.69 /sf
- Cost without elevator = $52.69 x 95,000 = $5,005,550
- Add elevators = $126,345 x 2 = $252,690
- Cost = ($5,005,550 + $252,690) x 1.03 = $5,415,987 14

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 Types of Construction Cost Estimating
• Conceptual Cost Estimate
 Example: Square-Foot Estimates with Cost index
- For the same example; if the first project was built in New York
and the second project will be built in Michigan. The cost index
for NY is 57 for last year and for MI is 49 for the current year.
𝐾𝑛𝑜𝑤𝑛 𝐶𝑜𝑠𝑡 𝑥 (𝐶𝑜𝑠𝑡 𝐼𝑛𝑑𝑒𝑥 𝑓𝑜𝑟 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝐶𝑜𝑠𝑡)
- Estimated Cost =
𝐶𝑜𝑠𝑡 𝐼𝑛𝑑𝑒𝑥 𝑓𝑜𝑟 𝐾𝑛𝑜𝑤𝑛 𝐶𝑜𝑠𝑡

$5,005,550+$252,690 x (49)
- Estimated Cost = = $4,529,241
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Types of Construction Cost Estimating

• Conceptual Cost Estimate
In summary….
 Rough Order of Magnitude (ROM)
 It is based on general parameters about the project
(facility size, use, location)
 Anticipated accuracy +/- 25%

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Types of Construction Cost Estimating
• Preliminary (Semi-Detailed) Cost Estimate
 Parametric Estimates
- Prepared by using equations that express the statistical
relationship between building parameters and the cost
of the building
- Assumptions of key building parameters or estimates
based upon early designs (gross square footage,
number of floors, length of perimeter, percentage of the
building that is common space, …etc.)
- Similar to square-foot estimates; however, the
equations used in parametric estimates are more
complex

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Types of Construction Cost Estimating

• Preliminary (Semi-Detailed) Cost Estimate
 Assemblies Cost Estimate
- Bidding the components of the project in groups known as
assemblies (systems)
- Useful for conceptual and preliminary estimates
- Simple assembly for conceptual: can be prepared quickly for
the entire building (excavation, footings, exterior walls, finishes,
etc.)
- Complex assembly for preliminary: using computer programs
(WinEst and Timberline) allow the user to prepare more
detailed estimates by taking off assemblies
- For constructing a wall; metal-stud, drywall, screws, tape, joint
compound, insulation, primer, paint, etc.
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Types of Construction Cost Estimating
• Preliminary Cost Estimate
In summary….
 It uses defined project scope and preliminary design
information
 Programming/Schematic design
 Basic floor plans
 Structure layout
 Elevations
 Engineering narratives (description of the systems)
 Anticipated accuracy +/- 15%
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Types of Construction Cost Estimating

• Detailed Cost Estimate
 Determination of the quantities and costs of everything
that is required to complete the project
 Prepared by using;
 A complete set of contract documents - Construction
documents (plans and specs)
 Including materials, labor, equipment, insurance,
bonds, and overhead, as well as an estimate of the
profit
 Labor productivity / time (database, similar work)
 High level accuracy +/- 5%

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 The Estimator
• To do quantity takeoff, the estimator must:
- Be able to read and quantify plans
- Have knowledge of mathematics and understanding of
geometry (linear feet, square feet, cubic yards, etc.)
- The quantities are usually multiplied by a unit price to calculate
material costs.

- Have the patience and ability to do careful, thorough work

- Be computer literate and use computer takeoff programs
such as On-Screen Takeoff

• This is a surveyor, still not an estimator

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The Estimator
• To be an estimator, an individual must:
- Be able, from looking at the drawings, to VISUALIZE the
project through its various phases of construction
- Have enough construction experience to possess a good
knowledge of job conditions;
- Means and methods, equipment, codes, safety requirements, etc.
- Have sufficient knowledge of labor operations and productivity
to thus convert them into costs on a project
- Be able to keep a database of information on costs of all kinds
(labor, materials, etc.)
- Be computer literate (database, spreadsheets, estimating
software)
- Be able to meet bid deadlines and still remain calm
- Have good writing and presentation skills (communicate what’s
included and excluded)
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 Sources of Estimating Information
• The best source of information is historical data
• Match how the company actually performs its construction
work

• There are several “guides to construction cost”

manuals available
• The manuals may be used as a guide in checking current
prices
• Used in helping architects check approximate current prices
and facilitate their preliminary estimate

• Electronic databases that can be utilized by estimating

software

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