What should a construction estimate include?
Developing Estimates Based on Construction These expenses include labor, equipment costs, subcontractor costs, and other factors: Labor rate: The amount per hour paid to skilled workers. Labor hour: The unit of measurement that determines the amount of work that a person can do within that hour.
What is a construction estimate quizlet?
A construction estimate is a summary of probable quantities and costs of materials, labor, equipment, and subcontracts to complete a project, including taxes, overhead, and profit, based on the best available information at the time.
What does estimating mean in construction?
Construction cost estimating is the process of forecasting the cost of building a physical structure. Of course, builders and clients both worry about the financial impact of cost overruns and failing to complete a project.
How do construction estimates work?
A construction estimate is a document that lays out, in detail, all of the costs involved in a construction project. A good construction cost estimate will provide both the construction manager and the client with an idea of the cost of the project so there are no surprises when the project is completed.
What are the main objectives of the estimating department in a construction company?
The main objectives of estimating department in a construction company are as follows. To prepare construction cost estimates that allow the contractor to choose profitable work by competitive bidding process. To check and verify the work which maximizes the accuracy of the estimate.
What are the main objectives of the estimating department in a construction company quizlet?
These objectives may include the following: 1) Preparing construction cost estimates... 2) Maximizing the accuracy of the estimating process... 3) Maximizing the productivity of the estimating department...
Who prepares the cost of estimation?
A cost estimator is the professional who prepares cost estimates. There are different types of cost estimators, whose title may be preceded by a modifier, such as building estimator, or electrical estimator, or chief estimator.
What are the different types of construction estimates?
There are three main types of estimates in construction. A company uses a specific type of estimate depending on what stage of the project it's for and what line items are being estimated, according to ACivilEngineer.com....Preliminary Estimate. ... Detailed Estimate. ... Quantity Estimate. ... Bid Estimate.
How accurate should a construction estimate be?
According to industry experts, companies who have access to reliable historical data can expect their construction estimates to be within a +/- 5-10% range, while smaller projects are typically within a +/- 15-20% range.
What are the duties of a construction estimator?
A construction estimator draws up, estimates, and determines the overall costs of a new or existing construction project. They create a list with all the needed materials and write down an estimated amount necessary to complete the client's project.
What are the things to avoid when putting together a construction budget?
Things to Avoid When Construction Budgeting One of the biggest mistakes a project manager can make when creating a construction budget is inaccurate estimates. This can be made more problematic by not having a definitive project schedule in place before doing a budgeting forecast.
How hard is construction estimating?
Estimating is one of the most difficult jobs in construction. It is also one of the most important. Profits are typically won or lost based on how accurate your estimates are and how closely they match up to your final project costs.
What is meant by cost estimation?
Cost estimation in project management is the process of forecasting the financial and other resources needed to complete a project within a defined scope. Cost estimation accounts for each element required for the project—from materials to labor—and calculates a total amount that determines a project's budget.
What is a conceptual estimate?
So, what is conceptual estimating? Conceptual estimating is the first predesign effort made to determine a project's cost and is usually a part of the feasibility analysis of a project. It tells the owner the anticipated costs before contemplating a project's feasibility and further development.
Which of the following is not a method used for preparing approximate estimate?
Q.Which of the following is not a method used for preparing approximate estimates?C.plinth area methodD.cylindrical base methodAnswer» d. cylindrical base methodExplanation: there are various methods used for preparing approximate estimates. these are the plinth area method, unit base method2 more rows
Why do many contractors hesitate to bid just before the expiration of a union contract?
Why do many contractors hesitate to bid just before the expiration of a union contract? There may be hesitation to bid a project just before the expiration of a union agreement due to the uncertainty of the outcomes of the negotiations.
What is estimate construction?
An estimate for any construction work may be defined as the process of calculating the quantities and costs of the various items required in connection with the work.
What is a complete estimate?
This is a complete estimate or list of quantities for all work items required to complete the concerned project. The quantity of each item of work is worked out from the respective dimensions on the drawing of the structure.
What is revised estimate?
A revised estimate is a detailed estimate of the revised quantities and rates of items of works originally provided in the estimate without material deviations of a structural nature from the design originally approved for a project. It is accompanied by a comparative statement abstract form showing the probable variations for quantity, rate, and amount for each item of work of the project compared with the original estimate side-by-side stating the reasons for variations. For fresh technical sanction, a revised estimate is prepared and submitted.
How to prepare an estimate?
An estimate is prepared by calculating the quantities from the drawings for various items and multiplying them with the unit cost of the item concerned. To prepare an estimate one requires -
Why is an estimate necessary?
Estimate for a work or project is necessary mainly for the following purposes: To ascertain the necessary amount of money required by the owner to complete the proposed project. For public construction works, estimates are required in order to obtain administrative approval, allotment of funds, and technical sanctions.
What is an estimate for maintenance?
An estimate is prepared for the items which require renewal, replacement, repairs, etc. for maintenance purpose. The total estimated cost of maintenance of a structure is generally kept within the prescribed limits on the percentage basis of the cost of construction of the structure and its importance.
What is supplementary estimate?
During the progress of the work, some modifications or additions due to material deviation of a structural nature from the design originally approved may be thought necessary for the development of a project. A supplementary estimate includes all such works. The method of preparation is the same as that of a detailed estimate, and it should be accompanied by a full report of the circumstances which render its necessity.
Why do contractors use cost estimates?
Contractors also use cost estimates to determine whether they should bid on a project. Architects and engineers usually provide input for these estimates to ensure the project remains within scope and budget. Project managers use cost estimates to track a project’s performance.
Why do construction estimates need to be accurate?
Construction estimates need to be accurate because profit margins are typically razor-thin in the industry, so even a slight miscalculation on costs can determine whether a contractor makes or loses money on a project.
What is bid estimate?
Bid estimates require an unusually large amount of research that’s typically drawn from a variety of sources. They include direct costs, take-offs, subcontractor quotes and the cost of supervising the project.
What is the purpose of level 2 estimate?
The Level 2 estimate is commonly known as the intermediate estimate. Its primary purpose is to determine the project’s general feasibility. It’s typically used to determine if a large project should proceed as planned.
How accurate are cost estimates?
Cost estimates generally become more accurate as the project progresses and estimators gather more information. Each estimate, therefore, begins with a wide range that becomes more narrow with a more precise definition of the project’s scope. For example, the American Society of Professional Estimators (ASPE) defines five levels of cost estimates.
What is a control estimate?
These estimates serve as a baseline for accessing and controlling the actual construction costs. Control estimates also allow contractors to plan for their upcoming costs in advance and determine the total cost of completing the project.
Why is accurate estimate important?
Accurate estimates are critical in construction because unlike other sectors where businesses set the price for their products and services, contractors must routinely bid on projects and the accuracy of the estimate can be the decisive factor in determining whether a project is won or lost.
How is a system estimate assembled?
In order to understand how a System estimate is assembled, it is a good idea to compare a Unit Price estimate with a Systems estimate. In a Unit Price Estimate, each item is normally included along the guidelines of the 50-division MasterFormat of the Construction Specifications Institute. In a Systems estimate, these same items are allocated to one of seven major group elements in the UNIFORMAT II organization. Certain items that were formerly grouped into a single trade breakdown must now be allocated among two or more systems.
How does Economies of Scale affect construction costs?
The size, scope of work, and type of construction project will have a significant impact on cost. Economies of scale can reduce costs for large projects. Unit costs can often run higher for small projects.
What is total cost including O&P?
Total Cost including O&P for the installing contractor is shown in the last column of the Unit Price and/or Assemblies. This figure is the sum of the bare material cost plus 10% for profit, the bare labor cost plus total overhead and profit, and the bare equipment cost plus 10% for profit. Details for the calculation of overhead and profit on labor are shown on the inside back cover of the printed product and in the Reference Section of the electronic product.
What are the factors that affect in place costs?
General business conditions influence “in-place” costs of all items. Substitute materials and construction methods may have to be employed. These may affect the installed cost and/or life cycle costs. Such factors may be difficult to evaluate and cannot necessarily be predicted on the basis of the job’s location in a particular section of the country. Thus, where these factors apply, you may find significant but unavoidable cost variations for which you will have to apply a measure of judgment to your estimate.
Can costs vary?
Costs can vary depending upon a number of variables. Here’s how we have handled the main factors affecting costs.
Is mobilization included in equipment costs?
The cost to move construction equipment from an equipment yard or rental company to the job site and back again is not included in equipment costs. Mobilization (to the site) and demobilization (from the site) costs can be found in the Unit Price Section. If a piece of equipment is already at the job site, it is not appropriate to utilize mobilization or demobilization costs again in an estimate.
Does material cost increase in dense urban areas?
Material prices in this book are for metropolitan areas. However, in dense urban areas, traffic and site storage limitations may increase costs. Beyond a 20-mile radius of large cities, extra trucking or transportation charges may also increase the material costs slightly. On the other hand, lower wage rates may be in effect. Be sure to consider both of these factors when preparing an estimate, particularly if the job site is located in a central city or remote rural location. In addition, highly specialized subcontract items may require travel and per-diem expenses for mechanics.
How to succeed in construction estimating?
One of the best ways for you to succeed in construction estimating is to increase your experiences. Learn from your business and from those around you. Network with others through LinkedIn and your trade associations. Ask great questions… and listen to the answers. Build a core group who can support you as you grow in your abilities.
What is a good estimate?
A good estimate will reveal key information about a project before the construction company bids or sells a project. Once a project is awarded, the estimate becomes the budget for the project. And it becomes an important tool for the project manager.
How many ways can you estimate the same project?
If you took 100 estimators from 100 different construction companies and put them all into the same room you will have 100 different ways to estimate the same project. No two companies and estimators look at the same project the same way.
Why is it important to have a good estimate?
Whether your company employs a team of estimators or they require their sales team to estimate projects, it is critical that good estimates are developed. Without developing good estimates, the future of the company is in doubt.
What is the most likely scenario of a project?
Most Likely Scenario – an estimator looks at the project and determines the areas where the project will have problems. This is based on experience and wisdom. They have been through a project like this before and chances are that something will go wrong at a specific point.
What is intuition in construction?
In estimating, intuition is a combination of applying knowledge with experience to the characteristics of a potential project. Ignore intuition and you place your company at risk. When an estimator develops a construction estimate they are really developing their negotiating positions.
What is due diligence in construction?
What is due diligence? It is defined as the reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something. In the case of a construction project on an existing building, you are selling something.
What is construction cost estimating?
Construction cost estimating is the process of forecasting the cost of building a physical structure. Of course, builders and clients both worry about the financial impact of cost overruns and failing to complete a project. That’s why they devote time and effort to estimating how much a project will cost before deciding to move forward with it. Clients considering large projects often seek multiple cost estimates, including those prepared by contractors and those calculated by independent estimators.
Who prepares cost estimates?
For some construction projects, contractors and subcontractors prepare the cost estimates, though this is not regarded as best practice.
Why is estimation software important?
Estimating applications make cost estimates faster and easier to produce, which is crucial in a construction market that’s immensely competitive. They’re also more accurate than human estimators working on their own, as long as you use up-to-date cost data. Estimation software has become a must-have for anyone generating complex construction cost estimates.
What is cost exponent?
The cost exponent is an indicator of whether a scale economy or diseconomy exists. For a discussion of how to calculate cost exponents in construction, consult Project Management for Construction. If the exponent is greater than zero but less than one, an economy of scale exists. If it is greater than one, a diseconomy of scale exists. If it is equal to one, the cost-capacity relationship is unaffected by scale.
What is contract document?
The contract documents encompass the bidding documents, which now function as a legal contract between owner and contractor. Contracts can follow a number of models, depending on how complete the construction design is and how the owner and contractor bear risks.
What factors affect the cost of a project?
One of the primary factors that influences cost is the building site. Waterlogged soils, previous construction, geological formations and the nature of the rock, native animal species, and the presence of historical or natural heritage sites are just a few of the things that can affect materials and labor requirements, delay the issuance of permits, and increase the time needed to complete the project. Similarly, the location of the construction site relative to economic centers can also be significant. Contractors may have to transport workers and materials for a long distance if the site is remote. In a bustling urban area, the wages may be higher. Furthermore, regulatory requirements may be stricter, and hence more expensive to fulfill or comply with, at some construction sites than at others. Lastly, certain construction sites require the completion of feasibility or impact studies, which are likely to prove expensive.
What is level 1 in construction?
Level 1: Order of Magnitude Estimate: Made when project design has not yet gotten under way, you only use an order of magnitude estimate to determine the overall feasibility of a construction.
What does a construction estimator do?
Construction estimating involves either summarizing the total costs of a specific construction project or preparing an itemized list of costs for the project. Estimated costs could be used in a contract bid package or as part of the negotiation process with the owner. You must be able to understand the plans and specifications and translate those needs into a cost estimate. For example, a takeoff is a quantity survey of the various materials needed for the project. Most companies have a standard approach to organize the quantity takeoff using a specific protocol.
What is estimation software?
Estimation software. Software is also available. It could be as simple as a sheet that automatically calculates quantities and costs or cloud-based software shared by the team to help with project management.
Can you bypass a construction degree?
You may be able to bypass the degree requirement if you have years of experience in construction. If you’ve worked as a field engineer or project manager, you’ve likely gained relevant experience and know how costs work. You could then potentially move into the estimating side rather than working on-site.
Is it rewarding to be an estimator?
Becoming a construction estimator can be an extremely rewarding job, especially for someone who enjoys data analysis in a collaborative work environment. And because there are multiple paths to becoming an estimator, anyone who is passionate about this job can find a way to succeed.
What is construction estimate?
Construction estimating is the act of calculating the cost for a construction project. The first step of every estimate is to perform the construction takeoff which measures all the quantities. You can then assign costs to those items.
How Much Does an In-House Estimator Cost?
This translates to approximately $2,000 per week. That’s about $8,700 per month including payroll taxes, insurance, etc.
What is the best way to estimate a project?
Estimating by hand is the traditional way to estimate projects. It’s a bit tedious and difficult to perform sometimes, especially if you’re estimating a big project.
How to prepare pricing for a project?
The most common way to prepare pricing for a project is the hard bid method. For a hard bid (also known as competitive bidding), the General Contractors get subcontractor bids. They then add their supervision, equipment rental, dumpsters, general conditions, contingency, and profit.
Can you itemize each part of a project?
So you can itemize each part of the project so you can calculate your direct costs.
Can you use Excel to calculate project costs?
I recommend you use an Excel template to calculate your project costs. But if you’re not computer savvy, you can use your notepad.
Should I hire an in house estimator?
We typically recommend you hire an in-house estimator or a qualified estimating firm like ours to estimate your projects. In-house is best if you can afford it, but most contractors are smaller operations and benefit from using an estimating firm to calculate costs “as-needed”. You won’t have a high payroll overhead.
When are construction estimators involved?
Whether it's a large construction project or a revitalization project, construction estimators are involved before the actual work begins.
What do construction cost estimators do?
Construction estimators: What do they do? Published on February 22, 2021. Construction cost estimators fulfill a crucial role in the construction process. A construction cost estimator works closely with professionals in other construction processes, including clients, architects, and vendors, to craft a detailed proposal outlining the costs ...
What does an estimator do?
This, therefore, makes an estimator's role crucial in any project.
Why is a cost estimator important?
To Conclude. Cost estimators are a vital part of any construction project. While it’s not always possible to prevent things from going wrong in a project, a quality cost estimator will help to limit this by accurately researching materials and costs involved right at the planning stage.
Why is software used in cost estimation?
Software has revamped the cost estimation process. Estimating software helps estimators avoid bidding too low or high and consequently miss out on business. Software also allows the estimator to assess costs more accurately , thus putting forward the best possible bid.
What is the role of a construction estimator?
Construction estimators play a central role in nearly every construction process , regardless of the size. At the most basic level, a construction cost estimator provides an estimate to the client that details the project’s cost. While this sounds simple on the surface, in the real world, estimators must balance various factors ...
How much does a cost estimator make in 2021?
According to ZipRecruiter, as of June 2021, the average salary of a cost estimator in the U.S. is $75,186 per year. The pay ranges from as low as $40,000 for entry-level to as high as $112,000 for experienced cost estimators. This range is based on the level of skill, education, location, and years of experience.
What Is Construction Estimating?
Accuracy in Construction Estimating Is Essential to A Project’S Success
- Over time, construction estimators have traded in their pencils and calculators for software, making a paperless process an achievable objective. While construction estimating has definitely come a long way in the past few decades, there’s still considerable room for improvement since only 31% of today’s construction projectscome within 10% of their original budget. The construc…
Overview
- Although cost estimators in the construction industry must be generally familiar with design and construction, they don’t need to be an architect or engineer. They do, however, need to be skilled in dealing with the expenses and data associated with any construction project, which includes quantity take-off, material prices, costs (equipment, capital, and operational), contingencies, vari…
Why Is Accuracy So Important in Construction Estimating?
- Of course, cost estimates should be accurate regardless of industry, but accuracy is particularly important in construction. Accurate estimates are critical in construction because unlike other sectors where businesses set the price for their products and services, contractors must routinely bid on projects and the accuracy of the estimate can be the decisive factor in determining wheth…
Key Components of Construction Estimating
- Although there are many components of construction estimating, cost estimators typically rely heavily on the project’stake-off, the document that describes the quantities and types of materials the project will require. This list of materials also drives the estimates for the time and labor needed to complete the project. Cost estimators typically classify these expenditures into direct …
Accuracy Levels of Construction Estimating
- Cost estimates generally become more accurate as the project progresses and estimators gather more information. Each estimate, therefore, begins with a wide range that becomes more narrow with a more precise definition of the project’s scope. For example, theAmerican Society of Professional Estimators(ASPE) defines five levels of cost estimates.
Conclusion
- Estimating construction costs is an increasingly vital part of project management, but construction companies must invest in thetechnologyneeded to make it effective. An estimate’s accuracy can make or break a project, which can also put a company’s survival at risk since many construction businesses live from project to project. Cost estimates are part of the bidding proc…
Costs in U.S. Or Canadian Dollars
Material Costs
- RSMeans data engineers contact manufacturers, dealers, distributors, and contractors all across the U.S. and Canada to provide localized and national averager material costs. If you have access to current material costs for your specific location, you may wish to make adjustments to reflect differences from the national average. 4 Included within material costs are fasteners for a norm…
Labor Costs
- Labor costs are based upon a mathematical average of trade-specific wages in 30 major U.S. cities. The type of wage (union, open shop, or residential) is identified on the inside back cover of printed publications or selected by the estimator when using the electronic products. Markups for the wages can also be found on the inside back cover of printed publications and/or under the la…
Equipment Costs
- Equipment costs include not only rental but also operating costs for equipment under normal use. The operating costs include parts and labor for routine servicing, such as the repair and replacement of pumps, filters, and worn lines. Normal operating expendables, such as fuel, lubricants, tires, and electricity (where applicable), are also included. Extraordinary operating exp…
Factors Affecting Costs in Estimates
- Costs can vary depending upon a number of variables. Here’s how we have handled the main factors affecting costs.