chapter 1
DESCRIPTION
SMM7TRANSCRIPT
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Chapter 1
Introduction
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Objectives• Upon completion of this chapter,
you will be able to:– List and briefly describe the different
functions served by estimating in the construction industry
– Briefly describe the cost planning process including the role of conceptual estimates and preliminary estimates
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Objectives (cont’d.)– Describe the three main project
delivery systems—traditional design-bid-build, construction management, and design-build—and explain how conceptual, preliminary, and detailed estimates are used with each
– Identify what type of estimating is required for lump-sum, unit-price, and cost-plus contracts
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Objectives (cont’d.)– Outline the detailed estimating
procedure– Recognize the need for knowledge of
Occupational Safety and Health Administration safety standards and the impact that compliance with the standards has on construction costs
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Introduction• Goal of this book:
– Present a method of compiling consistently accurate construction cost estimates • In a minimum of time• Can be easily integrated with latest
technology• Intended to represent a standard or basic
core
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What Is an Estimate?• Probable total cost of a future activity
– Occurs in all industries and government agencies:• Budget preparation for future expenditures• Anticipate what something will cost
– Basic approach:• Identify work items to be completed • Measure work items size • Assess likely cost of work
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The Role of Estimating
Figure 1.1 Role of the Estimator in the Traditional Construction Process (Delmar/Cengage Learning)
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Conceptual Estimates• Produced from owner’s notion of
the construction: – Lacks design details
• Primary factors for project feasibility:– Value and cost of development
• Cost profile embraces many constituents• Some costs are easy to establish
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Preliminary Estimates and Cost Planning
• Prepared as design develops– Informs whether design meets the
budget– Provides alternative design cost
information• Value analysis: improvement justification
– Can be subdivided into prices• Groupings of building components
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Preparing Construction Estimates
• Main categories:– Preliminary estimating techniques– Detailed estimating techniques
• Influential factors:– Project type– Delivery system– Nature of delivery system contracts
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Figure 1.2 Types of Project and Estimating Methods (Delmar/ Cengage Learning)
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Project Delivery Systems and Estimating
• Traditional (design-build) delivery– Project is fully designed before work begins
• Construction management delivery– Facilitates overlap between project stages– Allows earlier completion
• Design-build delivery– Single organization assumes responsibility
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Figure 1.3
Traditional (Design- Bid- Build) Delivery System
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Figure 1.4
Construction Management Delivery System
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Figure 1.5
Design- Build Delivery System
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Estimates for Different Types of Contracts
• Lump-sum contracts– Defined scope of work for stipulated sum
• Cost-plus contracts– Uncertain total cost of construction
• Used if work must get underway or is difficult to define
– Contract followed by costing of operations
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Estimates for Different Types of Contracts
(cont’d.)• Unit-price contracts– Measurement and payment– Based on pricing schedule
• Breakdown of the work • Estimated item quantities
– Enables owner to obtain competitive prices• Some cost control
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Estimates for Different Types of Contracts
(cont’d.)• Detailed estimates – Stages:
• Quantity takeoff• Recap quantities• Pricing the recap• Pricing subcontractor’s work• Pricing general expenses• Summary and bid
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Estimating and Construction Safety
• Occupational Safety and Health Administration – Safety standards
• Failure to comply may result in fines or imprisonment
• Cost of poor safety on the work site– Growing awareness
• Direct and hidden costs
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Summary• Estimating serves several purposes
– Preparation of bids and cost control• Conceptual estimates: project feasibility • Preliminary estimates: budget control• Detailed estimates: forecast costs
accurately
• Be aware of safety requirements– Occupational Safety and Health
Administration