INTRODUCTION TO ESTIMATING

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INTRODUCTION TO ESTIMATING

1–1 GENERAL INTRODUCTION

Building construction estimating is the determination of probable construction costs of any given project. Many items influence and contribute to the cost of a project; each item must be analyzed, quantified, and priced. Because the esti-mate is prepared before the actual construction, much study and thought must be put into the construction documents. The estimator who can visualize the project and accurately determine its cost will become one of the most important persons in any construction company.

For projects constructed with the design-bid build (DBB) delivery system, it is necessary for contractors to submit a competitive cost estimate for the project. The competition in construction bidding is intense, with multiple firms vying for a single project. To stay in business, a contractor must be the lowest-qualified bidder on a certain number of projects, while maintaining an acceptable profit margin. This profit margin must provide the general contractor an acceptable rate of return and compensation for the risk associated with the project. Because the estimate is prepared from the working drawings and the project manual for a building, the ability of the estimator to visualize all of the different phases of the construction project becomes a prime ingredient in successful bidding.

The working drawings usually contain information relative to the design, location, dimensions, and construction of the project, while the project manual is a written supplement to the drawings and includes information pertaining to materials and workmanship, as well as information about the bidding process. The working drawings and the project manual constitute the majority of the contract documents, define the scope of work, and must be considered together when preparing an estimate. The two complement each other, and they often overlap in the information they convey.

The bid submitted must be based on the scope work provided by the owner or the architect. The estimator is responsible for including everything contained in the drawings and the project manual in the sub-mitted bid. Because of the complexity of the drawings and the project manual, coupled with the potential cost of an error, the estimator must read everything thoroughly and recheck all items. Initially, the plans and the project manual must be checked to ensure that they are complete. Then the estimator can begin the process of quantifying all of the materials presented. Every item included in the estimate must contain as much information as possible. The quantities determined for the estimate will ultimately be used to order and purchase the needed materials. The estimated quantities and their associated projected costs will become the basis of project controls in the field.

Estimating the ultimate cost of a project requires the integration of many variables. These variables fall into either direct field costs or indirect field costs. The indirect field costs are also referred to as general conditions or project overhead costs in building construction. The direct field costs are the material, labor, equipment, or subcontracted items that are permanently and physically integrated into the building. For example, the labor and materials for the foundation of the building would be a direct field cost.

The indirect field costs are the cost for the items that are required to support the field construction efforts. For example, the project site office would be a general conditions cost. In addition, factors such as weather, transportation, soil conditions, labor strikes, material availability, and subcontractor avail-ability need to be integrated into the estimate. Regardless of the variables involved, the estimator must strive to prepare as accurate an estimate as possible. Since subcontractors or specialty contractors may perform much of the work in the field,

the estimator must be able to articulate the scope of work in order for these companies to furnish a price quote. The complexity of an estimate requires organization, estimator’s best judgment, complete specialty contractors’ (sub-contractors’) bids, accurate quantity takeoffs, and accurate records of completed projects.

The design-build (DB) and construction-manager (CM) project delivery systems are gaining in popularity. In the design-build delivery system, the contractor acts as both the designer and the general contractor. In the construction-manager delivery system, the contractor is involved in the design process, providing expertise in construction methods and costs, as well as managing the construction process. Both of these delivery systems require the contractor to pro-vide cost estimates for the proposed project throughout the design process.

At the conceptual stage of the project, the contractor prepares a cost estimate based on the project’s concept. This is known as a conceptual estimate. When performing a conceptual estimate, typically, drawings are not available or they are very limited. What exists is often a vague verbal or writ-ten description of the project scope, which may be accompanied by a few sketches. When preparing this type of estimate, the contractor makes assumptions about virtually every aspect of the project. The conceptual estimate is used early in the design process to check to see if the owner’s wants are in line with their budget and is often used as a starting point to begin contract negotiations.

During the design process, the contractor prepares and maintains a cost estimate based on the current, but incomplete, design. This is often referred to as a preliminary estimate. In addition, the contractor may prepare estimates that are used to select between building materials and to deter-mine whether the cost to upgrade the materials is justified.

What all these estimates have in common is that the design is incomplete. Once the design is complete, the contractor can prepare a detailed estimated for the project.