Construction Cost EstimatingClass #2: The Estimating Process

Prof. Ralph V. Locurcio, PE

Decision to bid Form the estimating team Estimate work plan

Type of estimate Estimating Procedures Documentation

Risk & contingency analysis Review & check the estimate Finalize the estimate

KickoffMeeting

WorkPlan

EstablishStandards

UpdateDatabase

PrepareEstimate

DocumentEstimate

ReviewEstimate

Adjust Estimate?

SubmitBid

ProjectExecution

ProjectCompletion

Yes

No

Revise

Lessons Learned

Feedback to improve data base

Reality C

heck

Type of estimate required Deliverables by subcontractors Budget for the estimate Staffing Schedule Methodology Controls & reviews Presentation format & production

Conceptual estimate – for project planning Decision based on units 70% Accurate Adjustments for time & location

Detailed estimate – for bidding Material take-off Equipment & cycle time Labor & productivity Admin+overhead+logistics+profit 95% Accurate = class standard

Read the plans, specs & contract Conduct a site investigation Decide on construction method Prepare schedule Material quantity takeoffs Plan for equipment Plan for subcontracts Estimate costs of labor & materials Assess risks Determine contingency

Industry standard for estimating Easy to format per bid instructions May be used as template for future

bids Avoids mistakes in calculations Saves time Summarizes costs Provides analytical tool Standard for homework in this class

Physical characteristics Sub-surface conditions Site logistics for construction

layout Condition of roads & bridges Storage space for lay-down Security requirements Operational requirements

Contract terms & conditions Payment & penalties Scope and quantities Complexity of construction Completeness of plans Quality of materials required

Basic approach & teaming Work breakdown structure Skills of work crews Decision on work to be

subcontracted Timing of individual activities Phasing of crews & subs on site Procurement of equipment Flow of materials & laydown Cash flow projection

Based on contract provisions Sequence of work Operational constraints Site constraints Weather & safety factors Lead time for materials Availability of subcontractors

Study plans & specs Bid instructions, format &

alternates Systematic breakdown of units Follow sequence of construction Categorize materials & labor Check for duplicates & omissions Document all work Review & check for errors

Materials, labor, equipment Subcontractor bids Contact suppliers Market factors apply Establish and update cost data

base

Mobilization Field office Insurance Bonds Taxes & permits Cleanup Demobilization

Complexity of plans & specs Terms of contract & penalties Experience with owner Timing of project Market factors for labor & materials Weather & safety Other uncertainties effecting

execution Probability of occurrence of each

Percentage of base estimate Determine high cost risk factors Expected net risk based on

probability Aggregate total project risk Add cost to cover risk

KickoffMeeting

WorkPlan

EstablishStandards

UpdateDatabase

PrepareEstimate

DocumentEstimate

ReviewEstimate

Adjust Estimate?

SubmitBid

ProjectExecution

ProjectCompletion

Yes

No

Revise

Lessons Learned

Feedback to improve data base

Re

ality Ch

eck

Slides are on my web site My web site:

www.my.fit.edu/~locurcio

Contact info for me…Prof. Ralph Locurcio, PELINK – Room 233

Office Hours: Mon + Wed + FriEmail: locurcio@fit.edu Web: http://my.fit.edu/~locurcio