1 The following is a transcript of the closed circuit video broadcast by the AMSNA on Construction Cost Estimating and presented by the Los Angeles Chapter of the American Society of Professional Estimators. For a copy of the estimating CD featured, containing 82 software items, send your mailing address and $20 to : Charles Munroe - CPE 3043 Amarillo Avenue Simi Valley, CA 93063 [email protected]CONSTRUCTION COST ESTIMATING The vital need for a good estimator Before the first shovel of dirt is moved, before the first nail driven, a construction project can be in serious trouble if it is not bid on the basis of an accurate estimate. Years ago the estimator was often viewed as just another member of the office staff. Today the cost estimator is generally recognized as one of the key personnel, in addition to the project manager, responsible for the success or failure of a project. At the time of bid the estimator knows more about the project than anyone in the construction company. He or she is relied upon to furnish reliable costs. If the estimator bids a project too high the time and expense of bidding the project are lost. If the estimator provides an estimate which is too low the company faces the prospect of losing far more money. There are many cases where a faulty estimate has resulted in the ruin of a company. The work of the estimator is vital to the success of a construction company. Various Types of Estimating The words estimator and estimating in the general vernacular can convey a number of things. There are estimators who determine the cost of: Moveable Items Such as computers, radios, televisions, automobiles and other mobile items. Members of the National Estimating Society members are involved in such estimating. Appraisers of valuables are sometimes also referred to as estimators. Construction Cost Estimator
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The following is a transcript of the closed circuit video broadcast by the AMSNA on Construction Cost Estimating and presented by the Los Angeles Chapter of the American Society of Professional Estimators. For a copy of the estimating CD featured, containing 82 software items, send your mailing address and $20 to : Charles Munroe - CPE 3043 Amarillo Avenue Simi Valley, CA 93063 [email protected]
CONSTRUCTION COST ESTIMATING The vital need for a good estimator Before the first shovel of dirt is moved, before the first nail driven, a construction project
can be in serious trouble if it is not bid on the basis of an accurate estimate. Years ago the
estimator was often viewed as just another member of the office staff. Today the cost estimator is
generally recognized as one of the key personnel, in addition to the project manager, responsible
for the success or failure of a project. At the time of bid the estimator knows more about the
project than anyone in the construction company. He or she is relied upon to furnish reliable
costs.
If the estimator bids a project too high the time and expense of bidding the project are
lost. If the estimator provides an estimate which is too low the company faces the prospect of
losing far more money. There are many cases where a faulty estimate has resulted in the ruin of
a company.
The work of the estimator is vital to the success of a construction company. Various Types of Estimating The words estimator and estimating in the general vernacular can convey a number of things. There are estimators who determine the cost of: Moveable Items
Such as computers, radios, televisions, automobiles and other mobile items. Members of the National Estimating Society members are involved in such estimating. Appraisers of valuables are sometimes also referred to as estimators.
Construction Cost Estimator
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Construction cost estimating, which we are concerned with here, involves the development of estimates of the cost of construction of static immobile items such as:
commercial, industrial and residential buildings, dams, roads, bridges, utilities Cost Engineers Large projects may have what is referred to as a Cost Engineer. A Cost Engineer has
functions that often overlap those of a Construction Cost Estimator. A Cost Engineer may be
involved in the production of a Rough Order of Magnitude (ROM) estimate or a Parametric
estimate; estimate types that will be described later. Once plans and specification become
available a Construction Cost Estimator will refine that cost with a detailed estimate. A
Scheduler will break the detailed estimate down into a schedule of activities and their associated
time and costs The Cost Engineer will track construction costs, labor, material, equipment and
sub-contracts, and develop reports for the project manager that indicate whether the project is on
schedule and within budge. The Cost Engineer will also process Change Requests for approval
or negotiation. On smaller projects the Construction Cost Estimator may handle all estimating,
scheduling and change order work.
Quantity Surveyors In the British Commonwealth and many European countries an estimator is referred to as a Quantity Surveyor. The Quantity Surveyor is tasked with development of a list of material, labor and equipment for the completion of a project. This list is then given to contractors to bid on the project. Classifications of Estimators As in most professions there is a hierarchy of positions based on the degree of
responsibility. These positions may go by a variety of names but generally follow this order:
Junior Estimator or Take-off Person
This is a starting position in estimating and generally involves taking off quantities from
plans and making calls to suppliers for price quotations. The title and tasks may vary from
company to company. A senior or chief estimator supervises this position.
Estimator
The next step up is the work of an estimator who is given more responsibility and may be
responsible for smaller estimates. This position is supervised by a senior or chief estimator and is
held by someone with less than 5 years estimating experience.
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Senior or Project Estimator
At this level an estimator may be assigned a project for which he or she is completely
responsible. A Senior or Project estimator may supervise a staff of estimators.
Chief Estimator, Manager of Estimating or Manager of Cost Control
In a large corporation there is generally a Chief Estimator or Manager of Estimating or
Manager of Cost Control. Such person will have a staff of Senior or Project Estimators who he or
she supervises. This is the highest position an estimator will achieve in a company. Often he or
she is paid a bonus or percentage of profits in addition to wages.
Estimating Consultant
The most rewarding level of estimating, financially and professionally, is that of a
consultant. Owners, construction companies and attorneys will call upon the services of an
estimating consultant. A consultant generally has many years experience in estimating and most
like may be a retired estimator. Some specialize in certain types of construction, value
engineering studies and others offer their services as expert court witnesses in lawsuits and
arbitration .
Professional Estimating Society Estimators
The American Society of Professional Estimators 675 S Washington - Alexandria, Virginia
Mail and Admin: 2525 Perimeter Place, Suite 103 Nashville, TN 37124 Tel: 888-378-6283 615-316-9200 Fax: 615-316-9800
Website: http://www.aspenational.com Membership is open to all classifications of estimators and certification as a professional estimator (CPE) is available. Estimator Equipment As in any profession an estimator has to have certain essential equipment with which to perform his or her job. The following list of items is typical for a general estimator. Specialty estimators may have different requirements. Work Space 1) A quiet room with a desk
2) A large table or drafting table upon which to lay plans 3) Good lighting over the table and desk 4) A plan rack or plan box to store rolls of plans
Communications
5) Telephone 6) Computer with access to the Internet
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7) Access to a fax machine 8) Access to a photocopy machine 9) Cell phone for field use
Typical Equipment
10) 10’ Tape Measure 11) 100’ Tape Measure 12) A good quality hand calculator 13) Architectural Scale 14) Construction Boots 15) Ear Plugs 16) Engineering Scale 17) Goggles 18) Graph Paper 19) Hand Held Compass 20) Hard Hat 21) Hi-Liters, various colors 22) Metric Scale 23) Paper, Pens, Pencils 24) Protractor 25) Thomas Guide for area of activity
Advanced Equipment
26) Digital camera or Video Camera 27) Miniature Tape Recorder 28) Scanner 29) Laser or Sonic Measuring Device
Reference Manuals There are reference manuals that all estimators should have access to as well as a dictionary of construction terms is definitely a must have.The following books and cost manuals are recommended: Construction Directories Blue Book of Building & Construction http://www.thebluebook.com
Thomas Regional Industrial Buying guide Construction Dictionaries Means Illustrated Construction Dictionary 781-422-5000 Dictionary of Architecture and Construction (from AIA) National Association of Women in Construction (NAWIC) Dictionary Regulations (Optional) Uniform Building Codes (UBC) Cost Manuals Design Cost Data (DCD) http://www.dcd.com Green Book of Equipment Rental http://www.equipmentwatch.com E-Mail [email protected] 1-800-669-3282 Fax 1-800-224-3527 1735 Technology Drive, Suite 410 San Jose, CA 95110-1333
Marshall & Swift
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Http://www.marshallswift.com E-Mail [email protected] 1-800-544-2678 915 Wilshire Blvd. 8th Floor Los Angeles, CA 90017 National Estimator by Craftsman Book http://www.craftsman-book.com 1-800-829-8123 Fax 760-438-0398 Craftsman Book Co.
6058 Corte del Cedro P.O.B 6500 Carlsbad, CA 92018-9974
R.S. Means Building Construction Cost Data http://www.reedconstructiondata.com 1-800-322-6996 Fax 1-800-895-8661 Reed Construction Data Inc.
30 Technology Parkway South Norcross, GA 30092-2912
Saylor Publications E-Mail saylor@saylor>com
1-800-624-3352 Fax 818-718-8024 9420 Topanga Canyon Blvd., Suite 205 Chatsworth, CA 91311
Trade Services http://www.tradeservice.com These books are generally available from the following bookstores in the Los Angeles, California area:
Builders Books 8001 Canoga Avenue Canoga Park, CA 91304 E-Mail :buildersbook.com (Tel) 818-887-7828 (Fax) 818-887-7990
Building News Bookstore 10801 National Blvd. Los Angeles, CA 90064 (Tel) : 310-202-7775 (Fax) : 714-535-8078
OPAMP Technical Book Store 1033 N. Sycamore Los Angeles, CA 90038 (Tel) 213-464-4322 (Fax)213-464-0977
Types of Estimates
Parametric An estimate developed in the earliest stages of the planning of a project and is
based on historical costs or physical performance of the project. The purpose of a Parametric
estimate is for budgetary and feasibility determinations.
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Example: A community wants to build a sewage treatment plant. The designers are aware of
a sewage treatment plant built several years ago in another city with a certain daily capacity
measured in gallons per day. The final cost of the plant divided by the capacity in gallons
gives a $4 / gallon construction cost. This cost must be escalated to today’s cost to account
for inflation and must be adjusted to the costs prevalent in the area of the proposed plant.
Say the first sewage treatment plant was built for $7,500,000 and had a capacity of
2,000,000 gallons of raw sewage per day or a cost of $3.75 / gallon. At the proposed site
local construction costs overall are about 10% higher and the desired capacity of the new
plant is 3,500,000 gallons per day. The new plant, according to a parametric estimate would
probably cost 3,500,000 gallons/day x $3.75/Gallon x 1.10 or $14,438,000. A Parametric
estimate typically may be increased by a contingency factor of up to 30%.
Rough Order of Magnitude In the early planning stages of a project all the information available may be only
the type of construction desired and the approximate square footage of space required to
fulfill the projects needs. A Rough Order of Magnitude estimate may be little more than the
gross square footage of a building times a updated historic unit price per square foot of floor
area. A Rough Order of Magnitude estimate will be increased by a contingency factor of up to
30%
Conceptual Estimate Generally at the conceptual stage a little more information is available and
includes a better definition of the type of construction, building heights, and other preliminary
information. A rough sketch of the outline of the building or project may be included. A
contingency of up to 25% is included.
Schematic Design Estimate At the Schematic level more information is available which may include a site
drawing, preliminary drawings of the building floor plan, some equipment identification, some
specifications. A contingency of up to 20% should be included.
Preliminary / Design Development Estimate When drawings and specification are at approximately the 50% complete stage a
design development estimate is usually commissioned to assure that the project is not over
designed or exceeding the clients budget. A contingency of up to 15% is added at this level.
Project Control or 90% Estimate At this stage the drawings and specifications are nearly finalized and may be
accompanied by soils reports, demolitions drawings, site drawings, utilities drawings and
equipment call outs. Generally no more than a 10% contingency is included.
All of the above estimates are generally produced for the benefit of the owner, architect
or designer. A contractor does not become involved in the production of these estimates unless
the contractor is engaged in design-build.
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Definitive / Bid Estimate At bid time a contractor will be furnished with 100% complete drawings,
specifications and bid documents that may detail time constraints, bonding requirements, and
other information concerning the conduct of construction. The contractor’s estimator will produce
a detailed estimate of the cost of labor, materials, equipment and any sub-contracted work. The
estimate will be backed up with detailed take-offs and references to the sources of costs.
The final cost will include the contractor’s direct costs, general requirements, overhead, bonding
and profit and will constitute the basis from which the bid price is derived. Generally no
contingency is used in the development of this type of estimate.
Types of Construction Contracts The type of construction contract offered dictates the final form of the estimate. There are
three basic types:
Lump Sum ( Fixed Price) This is the most commonly used form and in submitting a bid only a single price is shown
plus prices of any alternates. The estimate from which this fixed price is derived will include the
contractor’s direct costs, general requirements, overhead and profit. The plans and specification
on which a Lump Sum bid is based must be complete.
Unit Price Many public construction projects are bid as Unit Price. The owner furnishes a quantity
take-off and the bidders are required to offer a unit price for each item. The contractor must
maintain accurate records of the actual qualities used in order to file a claim for quantities in
excess of that furnished by the owner.
Cost-Plus-Fee This type of contract is used when a project has to be hurriedly finished, involves
unknowns that are not possible to estimate at the time of bidding or are used by an owner who
has a long standing relationship with the contractor. This type of contractual arrangement
requires accurate records of costs. In addition to his direct costs the contractor may be
compensate by ;
A fee expressed as a percentage of the total cost.
A fixed fee.
A fixed fee with either a bonus for coming in under a certain budget or schedule or a penalty
for failure to do so.
A fee based on a sliding scale
Project Selection Selection of projects to bid is a critical part of the construction business. A project that is
not within the parameters set by a construction company will result in a waste of an estimator’s
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time and can potentially lead to the company losing money. The first step is to set the companies
job selection parameters.
Project Type A contractor’s license to some extent sets limits on the type of work he, she or they are
permitted to perform. Other factors are how complicated the project is. An example was a
contract put out to replace a steam boiler at a local prison. The contractor with the winning bid
failed to understand the conditions of working in a prison and soon discovered that on a good day
productivity was considered 4 hours out of 8. He had failed to understand that there was a very
lengthy process of going through the sally port and the tool check exiting or that on foggy days
the contractor would not be allow into the prison. Better understanding of the nature of the
project, and it’s particular requirements, would have save the contractor from a great loss.
Understand the types of projects you want to bid on and insure that they are the types of projects
you have experience in and can successfully complete.
Project Location The further a project is from the main office the higher the cost of travel time and other
expenses such as the possibility for the need of per diem, use of unfamiliar sub-contractors or
labor force. Generally small firms prefer projects that are within 30 miles of their main office.
Larger firms may range much further out depending upon the size of the project.
Project Size and Bonding Capacity In selecting a project to bid on the estimator, or contractor, must set an upper and lower
limit to the size of a project they will bid on in addition to other factors. The contracting firm must
decide on a dollar amount below which it is not in their interest to bid. The upper dollar limit of
projects they will bid on is generally set by their bonding capacity.
Anticipated Competition Who else is bidding on a project can be a factor in determining whether a project is bid or
not. Example: a contractor with little or no experience in construction of schools would wise to
reconsider bidding on a school project when it becomes known that a contractor with a long
extensive record of winning bids on schools in the bidding. The watchword is “know your
competition”.
Degree of Difficulty
The degree of difficulty of a project plays a major role in project selection. If a
construction project involves particular difficulties that the construction company is equipped to
handle then this may be a prime project to bid, if the construction company is not familiar with, or
equipped to handle the work, then the best course of action is to pass.
Locating Projects
Construction Journals Subscription to construction journals is a must for a successful construction business.
These journals will give notice of projects out to bid and will list the project title, a brief description
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of the project, the location, the contact number for obtaining drawings and specifications and
often a list of those bidding on the project and an estimated value of the project. Some of the
more prominent are :
Construction Data Corporation http://www.cdcnews,com
Daily Construction Reporter http://www.dcreporter.com