CVE4215. Topic 1-Introduction to Estimating

8/9/2019 CVE4215. Topic 1-Introduction to Estimating

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Sr. ASMAWAN BIN MOHD SARMANSemester: January 2015

CVE 3204 ESTIMATING & CONTRACT

TOPIC 1: INTRODUCTION TOCOST ESTIMATING

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Learning Objectives:

The student will able to;Define the terminologyIdentify the purpose/ importance of cost estimating

Understand the different methods of cost estimating processand techniques to different stages of project development.Identify different methods of construction estimateRecognize cost data for estimating purposesIdentify the purpose/ importance of cost estimating forparties in construction project.Recognize the estimate methods and selection of methods.

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Regardless of size, shape or function of any

proposed work, a method of producing aaccurate estimate of the project is essential. A

contractor cannot afford to make an unrealisticoffer to a client who is instructing the work being

undertaken.

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Definition: Cost Estimate

Technique to forecast the possible costs incurred fora certain building or construction project viasystematic calculation employing certain

techniques.

It is part of cost planning process in controlling

the project cost at the design stage before anydrawings are embarked upon.

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Main Importance of Cost Estimate @Design Stage

According to Seeley (1996, p.154),the primary function of approximate or preliminary

estimating is to produce a forecast of probable cost offuture project, before the building has been designed indetail and contract particulars prepared. In this way the

building client is made aware of the likely financial

commitments before existence design work undertaken. Estimating process:

Initial stage design stage tender stage co nf i rm / p rec isecon t rac tua l su m (co nt rac t s tage)

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- Design estimate- Bid estimate- Control estimate

Types of Construction Estimate7


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Types of construction estimate

Design Estimates ( consultants / client's estimate ) during design stage

Screening estimates (or order of magnitude estimates)Preliminary estimates (or conceptual estimates)Detailed estimates (or definitive estimates)Engineer's estimates based on plans and specifications

Bid Estimates ( contractor estimate ) Tender stage / bidding stage

As a contractor, a bid estimate is submitted to the owner either forcompetitive bidding or negotiation.

Control Estimates post construction stageBudget estimate for financingBudgeted cost after contracting but prior to constructionEstimated cost to completion during the progress of construction.

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The relationship of estimating process inproject development stages

Table 1 shows the chronological development of the project, and the way inwhich the cost estimating relate to the plan of work and cost planningprocess.

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Cost Procedure & Techniques(RIBA stages)

RIBAStages

Inception Feasibility Outlineproposal

Schemedesign

Detail design

CostProcedure

Cost study ,establish cost

limit

Feasibilitystudies

Outline costplan

Preparedetail cost

plan

Prepare costcheck

Costingtechniques

Cost study ofsamples ofsimilarbuilding

Preliminaryestimates:either fromdeveloper /consultant(usingfinancialmethod /interpolationmethod)

Estimatesbased ongroupelements

Estimatebased onindividualelements

Approximatequantitiesmethod

Continued (next page)

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Cost Procedure & Techniques

Productinformation

Bills ofquantities

Tenderaction

Projectplanning

On-siteoperation

Completion feedback

PrepareBQ

Costanalysis ,tenderevaluation

Costreport

Preparefinalaccount

Updaterecord

Elementalcostanalysis of

tender

Monthlychecking ofvariations

andinstructions

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TOTAL COST TARGET = COST TARGET = COST LIMIT(individual elements) (group elements)

Cost Estimate as Design GuideCost limit

lump sum estimate of $2,000,000

Cost Target

$600,000

Cost Target

$750,000

Cost Target

$650,000

Elements

Groupelements

Individualelements

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Cost Estimate as Design Guide

Cost estimate functions as design guide whether the project isappropriate to the cost limit / target allocation made earlier.

What if cost estimate > cost limit / target ???What if cost estimate < cost limit / target ??What if cost estimate = cost limit / target ??

Remedial action taken / adjustment ???

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Remedial action taken / adjustment ???

If the estimate is > the allocated sum for the particularproject, the following could be carried out:

The design could be altered to reduce costExtra provisions are sought after or requested from the clientThe project is postponed is cancelled.

If the estimate is < the allocated sum, the following couldbe done;

To accept the estimateTo modify the design and/or the specifications to increase the estimateappropriate to the provisions set aside.

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COST DATA in estimating16


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Cost data

COSTDATA

Technical data

Priced books

Informationservices / cost

information

Tender /contract

document / BQ

Govtpublications:

PWD- unitpembangunan dan

khidmat kos,Contract & QS

dept

Dept. of

Statistics,Malaysia

Journals, magazines, etc.E.g.the Malaysian Surveyormagazineby ISM Spons Architects

& Builders pricedbook

SponsInternationalConstruction CostHandbooks

Spons Asia PacificConstruction CostHandbooks

Elemental CostAnalysis inthe

MalaysianSurveyormagazineby ISM

Previous project tender BQ/Contract document(cost

analysis / ECA)

Available books of costdata:- Average cost/ m2 for

(building work)- Schedule of rates;

- For minor & repair

works- For tender basedon drawings andspecs

- Construction Cost Guide(for the preparation ofpreliminary estimate)

- Building Material CostIndex

- Annual Survey ofConstruction Industries

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Cost Data (others)

Other Government publications ; publish policies cost,interest rates, labour etc. ( Ministry of Housing And Local Government,Bank Negara Malaysia).

Media

comments on economy, announcementi.e. changes

to government policies, changes to the control cost of building materials or currentrate of inflation.

Other sources:research conducted by Universities or other relevant bodies

Suppliers quotations or materials cataloguesContractor , subcontractor quotations

Cost information obtained from Client and consultant

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Cost Estimate Parties Design Stage19


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CLIENT / EMPLOYER

A cost estimate,assist in ALLOCATING THE BUDGETrequiredto execute a planned project.

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CONTRACTOR / BUILDERS

Cost estimate will,assists in the preparation of OFFER PRICEtoensure the offer price forwarded is reasonablefor bidding / tendering process.

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BUILDING MANAGER

Cost estimate;

assists in establishing information on theprobable total cost of repairs andmaintenance of the building when the buildingis completed.

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- Preliminary estimate- Approximate quantity- Elemental estimate

Methods of Estimate25


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Methods of Estimate

Preliminary Estimate

Used to establish theprobable initial allocation orthe approximate estimateof a project. Methodsemployed:

Unit Cubic Floor area Storey-enclosure

Later stage estimate

It used to produce value,which is comparable to thelowest tender sum. Methodsemployed:

Approximate quantity Elemental estimate

Options appraisal schematic design Detailed design tendering

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The selection of method

Depends on:The information and time to prepare the estimate

Time is short simple / easy method used

More info thorough method may be utilized.

The experience of the QS.

The total and type of cost data available:Relevant / updated cost data/ analysis, drawings, projectspecifications.

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CVE4215. Topic 1-Introduction to Estimating

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