Cost Estimating

Real World Construction Cost Estimating for Engineers

Presented by:
William J. Mather, PE Tetra Tech Inc.

Cost Estimating Varies by Purpose

Who is the estimate for?
The Project Owner The Design Team Construction Company

What stage of the project?

Conceptual Is this project economically feasible? Design Stage Is the project within budget throughout the design stage? Construction Stage Cost estimate by contractor as a basis of the bid.

Who is the estimate for?

Owner Must account for soft costs
Owners costs that are not part of a contractors bid: Design fees, and project management Construction Management fees, Permits Site Plan, Building, M/E/P Financing costs, inflation. Equipment and furnishings Commissioning

Design Stage
Cost estimates during the design process to verify costs.
Soft costs not always included General Conditions costs, such as field office, overhead, bonds, insurance, project management Square foot estimates in early stages Detailed estimates later in design

Construction Company Estimate

This is the way the contractor wins the project Lowest bidder based on plans and specifications
Quantity takeoff Material costs actual cost of materials. Labor types of crews, production. Equipment Backhoes, dump trucks.

Conceptual Estimating
Used early on in a project to determine economic feasibility Building Costs based upon square foot costs. Use Means Cost Guide for Construction. Soft costs usually a percentage of hard costs

Design Stage Estimating

Used to keep project within budget during design. As design progresses go from rough square foot costs to more detailed costs based on actual design drawings and specified materials. Perform quantity takeoff Can still use Means Estimating guide for unknown systems, i.e. HVAC

Construction Company Estimate

Estimators for construction companys prepare estimate to construct projects based upon project plans and specs. Obtain real prices for all material and equipment specified Different trades bid on different work, Civil, Concrete, Steel, Masonry, HVAC, Plumbing, etc.

Construction Company Estimate (Cont)

Basis of all estimates is: Material what material needs to be bought to build the project? Labor What will the costs of the crews be to build the project? Equipment what will the cost of the construction equipment be to build the project? Estimator performs quantity takeoff of plans Can be done manually or with help of computerized estimating software. Example - site work - pipe, manholes, catch basins, concrete curb, asphalt, etc.

Construction Company Estimate (3)

After material requirements are known, estimate labor and equipment Construction companies use crews to perform work. Typical paving crew could be:
Paving Machine Operator Vibratory Roller Operator 3 or 4 laborers Truck Drivers (?)

Construction Company Estimate (4)

Calculate cost of crew per day:
Burdened labor direct pay to employees plus cost of fringe benefits, i.e. insurance, vacation, etc. Prevailing wages Federal and State funded projects require certain hourly pay for each labor category, i.e. truck driver, paver operator, roller operator, laborer. Cost of crew = burdened rate of each crewman * no. of hours worked per day Cost of crew per day is total of all crewmembers

Construction Company Estimate (5)

After cost of each crew is known, calculate cost of machinery. Rental rates for rented equipment Blue book rates for owned equipment Blue book lists hourly rates of construction equipment including financing and operating costs. Calculate cost of equipment each crew will use.

Construction Company Estimate (6)

QUESTION:
If everyone bids on the same project, uses the same prevailing wages, and the same materials, how does one company bid a project lower than another company?

Construction Company Estimate (7)

ANSWER: THE MAJOR DIFFERENCE IN COSTS IS USUALLY THE ANTICIPATED PRODUCTION RATE OF EACH CREW.

Example: 10,000 SY of paving have to be installed. Company A thinks it will take 5 days, 2,000 sy per day. Company B thinks it will take 3 days, 3330 sy per day. Who should win the bid ---- Company B

Construction Company Estimate (8)

Decide how long it will take to build the project, then add up all costs for labor, material and equipment. This is the raw cost to do the work. Must include company wide overhead, i.e. home office, office staff, office expenses, other costs not project specific. Other project costs such as job trailers, superintendant, miscellaneous supplies, etc. Profit How much money do you want to make on this project?

Construction Company Estimate (9)

Final bid equals: Labor Material Equipment Other project costs Company overhead Profit Equals total bid for the project.

Example Plan Sheet New Pencader Dormitory Project

Example Conceptual Estimate Pencader Dormitories

Example Conceptual Estimate Pencader Dormitories (2)

Example Conceptual Estimate Pencader Dormitories (3)

RSMeans Building Construction Cost Data Guide

Means Historical Cost Data Storm Drainage

RSMeans Crew Composition