CON 4003 CVE 4073/5073 Construction Cost Estimating Class #2: The Estimating Process Prof. Ralph V. Locurcio, PE.

CON 4003 CON 4003 CVE 4073/5073CVE 4073/5073Construction Cost EstimatingConstruction Cost Estimating

Class #2: The Estimating Class #2: The Estimating ProcessProcess

Prof. Ralph V. Locurcio, PEProf. Ralph V. Locurcio, PE

The Estimating Process-1The Estimating Process-1 Decision to bidDecision to bid Form the estimating teamForm the estimating team Estimate work planEstimate work plan

Type of estimateType of estimate ProceduresProcedures DocumentationDocumentation

Risk & contingency analysisRisk & contingency analysis Review & check the estimateReview & check the estimate Finalize the estimateFinalize the estimate

The Estimating ProcessThe Estimating Process

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

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

Prepare the estimatePrepare the estimate Conceptual estimateConceptual estimate

Decision on unitsDecision on units Adjustments for time & locationAdjustments for time & location

Detailed estimateDetailed estimate Material take-offMaterial take-off Equipment & cycle timeEquipment & cycle time Labor & productivityLabor & productivity Admin+overhead+logistics+profitAdmin+overhead+logistics+profit

Basic estimating Basic estimating procedureprocedure

Read the plans, specs & contractRead the plans, specs & contract Conduct a site investigationConduct a site investigation Decide on construction methodDecide on construction method Prepare schedulePrepare schedule Material quantity takeoffsMaterial quantity takeoffs Plan for equipmentPlan for equipment Plan for subcontractsPlan for subcontracts Estimate costs of labor & Estimate costs of labor &

materialsmaterials Assess risksAssess risks Determine contingencyDetermine contingency

Basic estimating Basic estimating procedureprocedure

Read the Plans, Specs & Contract

Conduct Site Visit

Decide Construction

MethodPrepare Schedule

Plan for Subcontracts

Plan for EquipmentMaterial Take-Offs

Estimate costs

Determine contingency

Analyze Risk Factors

Finalize Bid

Conduct thorough site Conduct thorough site visitvisit

Physical characteristicsPhysical characteristics Sub-surface conditionsSub-surface conditions Site logistics for construction Site logistics for construction

layoutlayout Condition of roads & bridgesCondition of roads & bridges Storage space for lay-downStorage space for lay-down Security requirementsSecurity requirements Operational requirementsOperational requirements

Read the plans, specs & Read the plans, specs & contractcontract

Contract terms & Contract terms & conditionsconditions

Payment & penaltiesPayment & penalties Scope and quantities Scope and quantities Complexity of constructionComplexity of construction Completeness of plansCompleteness of plans Quality of materials Quality of materials

requiredrequired

Decide construction Decide construction methodmethod

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

subcontractedsubcontracted Timing of individual activitiesTiming of individual activities Phasing of crews & subs on sitePhasing of crews & subs on site Procurement of equipmentProcurement of equipment Flow of materials & laydownFlow of materials & laydown Cash flow projectionCash flow projection

Conceptual work Conceptual work scheduleschedule

Based on contract provisionsBased on contract provisions Sequence of workSequence of work Operational constraintsOperational constraints Site constraintsSite constraints Weather & safety factorsWeather & safety factors Lead time for materialsLead time for materials Availability of subcontractorsAvailability of subcontractors

Material quantity takeoffMaterial quantity takeoff Systematic breakdown of unitsSystematic breakdown of units Study plans & specsStudy plans & specs Bid instructions, format & Bid instructions, format &

alternatesalternates Follow sequence of constructionFollow sequence of construction Categorize materials & laborCategorize materials & labor Check for duplicates & Check for duplicates &

omissionsomissions Document all workDocument all work Review & check for errorsReview & check for errors

Calculate direct costsCalculate direct costs

Materials, labor, equipmentMaterials, labor, equipment Subcontractor bidsSubcontractor bids Contact suppliersContact suppliers Market factors applyMarket factors apply Establish and update cost Establish and update cost

data basedata base

Calculate indirect costsCalculate indirect costs MobilizationMobilization Field officeField office InsuranceInsurance BondsBonds Taxes & permitsTaxes & permits CleanupCleanup DemobilizationDemobilization

Conduct risk analysisConduct risk analysis Complexity of plans & specsComplexity of plans & specs Terms of contract & penaltiesTerms of contract & penalties Experience with ownerExperience with owner Timing of projectTiming of project Market factors for labor & materialsMarket factors for labor & materials Weather & safety Weather & safety Other uncertainties effecting Other uncertainties effecting

executionexecution Probability of occurrence of eachProbability of occurrence of each

Determine contingencyDetermine contingency

Percentage of base estimatePercentage of base estimate Determine high cost risk Determine high cost risk

factorsfactors Expected net risk based on Expected net risk based on

probabilityprobability Aggregate total project riskAggregate total project risk

The Estimating ProcessThe Estimating Process

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

That’s all for today…That’s all for today…

Slides are on my web siteSlides are on my web site My web site:My web site:

www.my.fit.edu/~locurciowww.my.fit.edu/~locurcio