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Republic of the Philippines

EASTERN VISAYAS STATE UNIVERSITY
Tacloban City

CONSTRUCTION
PROJECT
MANAGEMENT

Prepared and Compiled by:

DANILO B. PULMA, D.M.

(for internal use only)

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IV. CONSTRUCTION COST ESTIMATING

Two Major Classification of Estimate:

1.) Design Cost Estimate – are prepared at various stage in design to aid designers.
2.) Contract Estimate – are prepared by contractors to enable a competitive bid for a project to be
submitted.

Qualifications of an Estimator:

• A knowledge of the details of construction work;

• Experience in construction work;
• A fund of information to materials required, labor hours required, plant needed, overhead
problems and cost of all kinds;
• Good judgment in regard to different localities, different jobs, and different workmen;
• A good method for preparing an estimate;
• Ability to do careful, thorough, painstaking and accurate work;
• Ability to collect, classify, and evaluate data relative to estimating;
• Ability to visualize all the steps during the process of construction.

Design Cost Estimate:

Purpose:

1. Cost estimating at the design phase serve to advise the client on probable costs of a proposed
facility. Depending on the stage at which the estimate is made, the estimate may be used to:

1.1 Assess project possibility

1.2 Prepare a cost budget
1.3 Assess client’s ability to pay
1.4 Make decisions on continuing or aborting the project and
1.5 Make finance provisions.

2. The design team may be used to estimate:

2.1 Prepare a cost plan

2.2 Assess the balance expenditure between the various components of the projects and
2.3 Assess the suitability of a proposed solution.

3. Design estimates are used in the selection of the contractor.

Methods:

There are various methods for making estimates. The methods used will depend on:

1. the purpose for estimating

2. the amount of design information available
3. the time available for estimating and
4. the cost data available

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The cost estimating methods are classified in construction literature according to the procedure
used in arriving at the estimate as:

1. The Unit Method

The unit method allocates cost to each accommodation unit. The total estimate for the project
is determined by multiplying the total number of units by the unit rate. The unit rate is
calculated from information extracted from documentation of previous similar contracts with
costs suitably adjusted for inflation, changes in design, state of the market, etc.

Car Parks Cost/car space

Hospitals Cost/bed
Schools Cost/pupil
Theaters Cost/seat

2.0 The Cubic Method

The volume of the building multiplied by the cubic rate give the approximate cost of the
building. The method for obtaining the height of the building depends on the construction
method and the nature of occupation. Cost per cubic meter estimates are used for buildings
that may have varying floor heights such as warehouses.

3.0 The Floor Area Method

This method involves measuring the total floor area of all storeys between external walls
without deductions for internal walls, lifts, stairwells, etc. the total approximate cost is
obtained by multiplying the area by the appropriate rate per square meter. The calculation is
quick and straightforward and cost is expressed in floor area which is more meaningful to the
client than unit or cubic content.

4.0 The Storey Enclosure Method

The objective of this method is to devise an estimating system which would take the
following into account:

a. shape of building
b. total floor area
c. vertical positioning of floor areas in the building
d. storey heights of building and
e. extra cost of sinking usable floor area below ground level.

Weighing factors for SEM

a. 2 times the area of the ground floor or 3 times if below the ground level
b. additional weight of 0.15 for every floor above ground (2+0.15x)
where x = floor no.
c. additional factor of l is applied to wall and floor areas adjoining the earth
d. I times the roof area measured to wall surfaces
e. I times area of external wall.

When using the technique, the following works have to be estimated separately:

a. Site works such as roads, paths, drainage, and other external works
b. Extra cost of foundations, which are more expensive than those normally provided for
the particular type of building

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c. Sanitary plumbing, water services, heating, electrical and gas services and lifts
d. Features which are not general to the structure as a whole, such as dormers, canopies and
boiler flues and
e. Curved works

The aim of SEM is to obtain a total superficial area in square meters to which a single rate
can be attached. Using the method involves using various factors for floor areas depending on
the location of the floor and the weight to obtain the storey-enclosure units. Prices thus
obtained are said to be much closer than using the methods earlier described. The method has
had very limited applications in industry, due to volume of
work involved.

5.0 The Approximate Quantities Method

This method involves pricing approximate building quantities at rates produced at the same
time the quantities are prepared. The procedure is to measure approximate quantities based on
drawings produced fort he projects. The most significant item are identified and measured
while less significant cost items are ignored. Their presence, however influence the rates
used. Composite price rates are obtained by combining or grouping bill items. The method is
generally accepted to be the most accurate approximate estimating method. It can only be
used when design has progress fairly well.

6.0 The Elemental Cost Analysis

This method utilizes elemental cost analysis of previous similar projects as a basis for
estimating. The cost is normally computed on a superficial or floor area basis but the overall
superficial cost is broken elements and sub-elements. At this lower level of sub-division, it
becomes possible to make adjustments for variations in design in the new project as
compared with the historical projects from which the data is obtained. The attraction of this
method is that relationship between elements and costs are established. This aids designers.

7.0 The Parameter Estimating

A parameter is an attribute of a system, the measure of which is a key element of the whole
for which it is a part. Parameter estimating uses unit costs which are allocated to trades or
components systems of a construction project. Parameter measures are then chosen to divide
into trade costs, one parameter per trade. For example, structural steel costs may be related to
the grass floor area supported and dry wall costs to the internal area. The merit of this
technique, is that in determining a measure of preliminary costs, the designer has merely to
take off the parameter measure quantities and use a historical library of parameter costs by
trade.

8.0 The Factor Estimating Method

This method is used for projects with single predominant cost components, such as oil
refineries, foundries, etc. the factor estimates develops factors for each component as a
function of a predominant cost. Often, this component is the purchased equipment cost for the
project. The theory is that components of a given type of project will have the same relative
cost as a function of a key or predominant component cost which hardly varies across
projects. Factor cost data accumulated over time is used to determine a preliminary cost
estimate for the project. A component cost is determined by multiplying the historical factor
for that component by the estimated purchased equipment cost for the proposed project.

9.0 The Percentages Method

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This method uses the same concept in the factor estimating method but all items are
expressed as percentages of the total cost rather than use factors related to a single cost item.

Procedure for Design Cost Estimating:

Depending on which estimating technique is adopted, the procedure for design cost estimating can be
stated as:

1. calculating quantities and units for estimating

2. determination of the unit rates to be used
3. adding up to arrive at a total cost estimate and
4. making adjustments to the estimate.

Calculating the quantities is a technical and fairly straightforward process. The quantities are
determined from information supplied by the client or the design team. Determination of unit rates
combines technical expertise with subjective evaluations. Usually, a unit rate is abstracted from a
historical project, the rate is then adjusted to cater for inflation, variations in design, market
conditions, etc. The factors that contribute to the determination of appropriate unit rates are:

1. Market condition - past data is interpreted in the light of present circumstances; allowances
2. Design Economics – variations in shape, height, rise, etc. are considered
3. Quality - effort is made to select similar projects to minimize differences in quality
4. Engineering Services - quality and level of specialist services
5. External Works - differences
6. Price and design risks - price fluctuations, changes in design are considered
7. Exclusions - the items excluded from the rate should be well stated

Information Requirement for Contractors Estimating:

• Drawings
• Specifications
• Schedules
• Technical Reports
• Programme of work periods for sub-contractual trades
• Bill of quantities

The estimator may obtain, for the project, information details which:

• relate to the contractor’s intended method of working

• impose restrictions
• affect access
• interrupt the regular flow of trades
• affect the duration of the project
• require specialist skills and materials
• have significant effect on the programme
• arc of major cost significance

Contractor’s Estimating Methods

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Estimates produced by the contractor are based on a relatively complete set of plans and specifications and
they involve much more than simply applying historical unit costs to completed quantities. The contractor’s
bid estimate is the foundation for a successful project. The bid must be low enough to obtain the work, yet
high enough to make a profit.

The items covered by the contractor’s estimate are:

Direct Costs
• Labor and materials
• Plant and freight expenses
• Sub-contracts

Indirect Costs

• Erection and dismantling of plants

• Temporary works
• Temporary buildings
• Store and yard labor
• Tools and tackle
• Welfare
• Insurance
• Notices and fees
• Sit management and supervision
• Contingencies
• Special conditions of contracts
• Head office overhead
• Finance and profits

Two Methods of Contract Cost Estimating

1. Unit Rate Estimating

In Unit Rate Estimating, the calculation of labor, plant or material rate is based upon a
predetermined output or wage rate and the quantity of work stated against the bill item. The
estimator selects historical rate or prices for each item in the bill of quantities using either
information from recent similar contracts, or published information, or built up rates from
own analysis. The technique is most suited to building and repetitive works where the
sequences of operations are well defined. To provide a good estimate using the unit rate
technique, it is essential that the rates are selected from an adequate sample of similar work
with reasonably constant levels of productivity and limited distortions arising from
construction risks.

2. Operational Estimating

Operational estimating is the calculation of a direct cost rate of labor and plant base upon the
total quantity of work involved and the total period that resources will be required on site.
Operational estimating then can be defined as the fundamental technique wherein the total
cost of the work is compiled from consideration of the constituent operations or activities
defined in the construction method statement and programme and from the accumulated
demand for resources. This is also the best estimating technique for evaluating uncertainties
and risks, particularly those likely to cause delay.

The Contractor’s Tender

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The price submitted by the contractor is more than an estimate of construction cost fort he project.
The figure below illustrates that the contractor’s tender has two major components – an estimate
of construction cost and mark–up. The mark–up comprises the profit and risk and the general
overhead. The construction cost resources that will be consumed by the project. The contractor’s
mark-up comprises:

• general overheads – a proportion of head office running costs allocated to a project;

• risk assessment and profit desired from the project

Schematic Diagram of the Structure of the Tender Price

Direct Costs
Construction Costs
Site Overheads
Tender Price
General Overheads
Profit and Risk

Schematic Diagram of the Alternative Structure of the Tender Price

Direct Costs
Construction Costs
Site Overheads Net Costs
Tender Price
General Overheads
Profit and Risk

General Checklist For Estimates:

A. Site Checking
B. Soil Test
C. Preparation of Plans and Documents
D. Acquisition of Building Permit
E. Site Clearing
F. Mobilization
a) Construction of the following:
1.) Storage Bodega
2.) Security Outpost
3.) Staff Field Office
4.) Electrical and Mechanical Room
5.) Installation of Water and Electrical Supply
G. Stake-out Building
a) Surveyor’s Fee
b) Form for batter board
c) Tie wire, nails, etc.
H. Excavation and Back filling
a) Heavy Equipment
b) Manpower
I. Steel Reinforcement Concrete and Masonry Work
1.) Fence
2.) Zocalo Wall
3.) Concrete
For Concreting
a) Column
b) Beam
c) Slab
d) Septic-Tank
e) Form Work

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f) Foundation
For Foundation
a) Footing Lumber
b) Footing Concrete
c) Footing Hardware
d) Post
e) Impost (Short Post)
f) Earthfill base Court

4.) Masonry

1) Window casing
2) Base board
3) Door casing
4) General moulding
5) Special moulding
6) Millwork hardware

J. Electrical and Plumbing roughing in Mechanical

1.) Air conditioning (Centralized or individual)
2.) Hot and Cold water connections
3.) Wall insulation
K. Acoustic and Sound Proofing
L. Roofing
1.) Truss
2.) Rafter
3.) Wind Bracing
4.) Purling
5.) Roofing sheet
6.) Roofing hardware
7.) P.G.I. Ready Made Components
a) ridge roll
b) ridge
c) valley
d) gutter
e) down spouts
f) flushing
g) stainer
8.) P.G.I. hardware
9.) Special-Roofing-Long span

M. Lumber Frame work

1.) girder
2.) joists
3.) girt
4.) ceiling joist
5.) ceiling nailing strip
6.) siding stud
7.) partition stud
8.) solid bridging
9.) framing hardware
a) screw
b) nail
c) tension nail
d) bolts

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N. Stair

1.) stringer
2.) tread
3.) riser
4.) handrail
5.) newel post
6.) balusters of framing
7.) paneling
8.) stair hardware
9.) concrete base
10.) grille work

O. Stock Panel
1.) Exterior Siding
2.) Interior Siding
3.) Partition
4.) Flooring
5.) Ceiling

P. Tile work
1.) Flooring Tile
2.) Weens Coating Tile
3.) Mortar
4.) Plaster
5.) Special masonry finish
a) wash out
b) granolithic
c) synthetic
d) sum blast
e) granatic
f) Baguio Stone

Q. Rough Hardware
1.) nail
2.) bolt
3.) tension bar
4.) trun buckle
5.) W.I. strap work
6.) Wire

R. Finishing Hardware
1.) Fenestration
a.) hinge
b.) door lock
c.) barrel bolt
d.) chain belt
e.) special lock
f.) pull chain
g.) automatic closer
h.) casement hardware
2.) Cabinets and Closets (same as Item R-1)
3.) Plumbing
a.) floor drain
b.) special drain

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c.) barrel bolt

d.) stock cock
e.) shower head
4.) Electrical Work
a.) receptacle
b.) switch
c.) switch box
d.) fuse box

S. Fixture
1.) Water closets
2.) Lavatory
3.) Bath tub
4.) Shower stall
5.) Urinal
6.) Bidet
7.) Kitchen sink
8.) Slop sink
9.) General Toilet Accessories

T. Doors and Windows

1.) Window Sash
2.) Door Sash
3.) Window Framing
4.) Door Framing
5.) Window Glass
6.) Door Glass
7.) Window Grill
8.) Door Grill

U. Special Lumber Work

1.) Cone Light

2.) Closet
3.) Cabinet
4.) Serving partition
5.) Built-in unit
6.) Panelling

V. Water Proofing and Wood Preservatives

1.) Flinkote
2.) 2-Ply hot process
3.) Saharra
4.) Solignum
5.) Sika Prestinent
6.) And other Chemical Adhesive

W. Painting and Varnishing Job Overhead

1.) Project Engineer

2.) Project Inspector
3.) Security Guard
4.) Insurance
5.) Workmen’s Compensation
6.) Operator

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7.) Consumption for the following:

a.) Electric
b.) Water
c.) Gas
8.) Representation

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