Ahmed Elyamany, PhD

October 31/November 3, 2010

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Write a short report (not less than 800 words) in

one of the following topics:

Egyptian Contractors Union

Contractor prequalification
Qualifications of Project Manager
Software used in Estimating

The report should include:

Cover Page- Introduction- Discussion- ConclusionReferences

The evaluation criteria are:

Organization 25%
Discussion 50%
References 25%.

By the end of this lecture, you will:

1. Define the meaning and steps of Estimating.
2. Differentiate between Estimation and
Calculation.
3. Estimate the cost of different construction
activities.
4. Define the Method Statement.
5. Prepare a Method Statement for different
construction items.

Definition:
To judge approximately the value or produce the
approximately cost of project.
Process:
Planning and scheduling the estimate
Project study - Collection of cost information and
rates
Preparation of method statement
Assessing output of selected resources
Calculation of the direct cost of each item
Calculation of the site overhead
Estimator report

Planning and scheduling the estimate

Project study

Collection of cost information

-

Calculation of rates
- all-in labor rate

- all-in plant rate

- material cost
- sub-contractor cost

Preparation of method statement

Assessing output of selected resources and elapsed time of resources

Calculation of the direct cost of each item

Calculation of the site overhead

Estimator report

Drawings
Specifications
Contract conditions
Meeting with the owner and architect
Site visit

General description.
Soil.
Topography.
Transportations.
Utilities.
Labors.
Safety arrangements.
Temporary buildings.
Neighbors.

Collection of cost information:

Daily cost of labor.
Daily cost of equipment.
Cost of materials.

Calculation of rates:

All-in labor rate

All-in plant rate
Material cost
Sub-contractor

= )All-in labor rate (LE/day

=
+ + + + +
= ) +
+ + (


= )All-in plant rate (LE/day

= + +
+ +
= ) + +
+(

A statement of the construction methods and

resources to be employed in executing
construction work. This statement is normally
closely linked to the tender program

Major factors in planning a method statement :

Cost
Time
Resource availability
Quality
Health, Safety, and Environment

Alternative methods of construction

Alternative Sequence of work

Alternative rates of construction

Alternative site layout
Preferred method of construction

Pre-tender construction program

Sequence of
main activities

Duration of
main activities

Duration of
overall project

Labor & plant

required

Qualitative sequential screening for Alternative

methods

Alternative methods

Acceptable to

Feasible

consultant?

Adequate

Safety

quality

Plywood

Rough-swan

Steel

Brick

Corrugated iron

Corrugated asbestos

Trench sides

Cost and time comparison for 3 shuttering

methods that pass the previous screening process
Cost / unit of shutter

plywood

Swan board

Asbestos

Material cost (LE)

20

Off-site making cost (LE)

19

--

--

--

--

10

9.5

10

+
Residual value (LE)
/
Number of uses
On-site making cost (LE/use) +
Total cost / use (LE/use)

{(20+19-4)/10} (4/3)+9.5
+8 =11.5

=10.83

3+10
=13

Methods of Estimating
Unit method
Space method

Element method
Spot method

Detailed cost method

Detailed cost method

Unit rate method

Operational method

Quantity of Plain concrete = 1080 m3

1 m3 of P.C. consists of (250 kg cement + 0.8 m3 gravel +
0.4 m3 sand)
Vendor price of 1 m3 of P.C. =250 LE / m3

Estimate Item price for plain concrete

Equipment crew
No.
Equipment
1
Pump
3
Truck mixer
2
Vibrator

Production rate
30 m3/hr
9 m3/hr/one
-------

All - in rate
650 LE/day
520 LE/day/one
150 LE/day/one

Labor crew
Foreman
Laborer

No.
1
5

All in rate
90 LE/day
55 LE/day/one

Material cost
Assume allowable for (Handling + wastage + price
increase + discount) = 22 %
Cost of 1 m3 of PC = 250 x 1.22 = 305 LE/m3
Material cost = 1080 x 305 = 329,400 LE

Labor cost
Labor crew cost / day = 1 x 90 + 5 x 55 =365 LE/day
Production rate = 30 OR 3 x 9 = 27 Choose 27 m3/hr
Duration = 1080 27 = 40 hr
Assume: one day = 8 hr
Duration = 40 8 = 5 days
Labor cost = 5days x 365 LE/day = 1,825 LE

Equipment cost
Equipment crew cost = 650 +3 x 520 + 2 x 150
= 2,510 LE/day

Duration = 5 days
Equipment cost = 5days x 2,510 LE/day = 12,550 LE
Item cost
Total item cost =329,400 +1,825 +12,550 =343,775
Assume price factor = 1.25
Item price = 343,775 x 1.25 = 429,718.75 LE
Item unit price = 429,718.75 LE 1080 m3
= 397.89 LE/m3

Definition :
A sum of money to cover costs which are
forecasted but are difficult or impossible to
identify when proposing.

Example
If you know that site overheads = 10% direct cost
and mark-up = 15% construction cost
Calculate :
1) Total direct cost, construction cost, tender price, and unit
price of each item for the project assuming no contingency is
added to the total cost estimate
2) The amount of contingency to be added to the total
construction cost estimate using the expected net risk
analysis method
3) The final cost estimate and final tender price assuming
uniform distribution of contingency

Direct cost
No.

Item

Unit Quantity
Material Equipment

labor

S/C

Maximum

cost

probability

LEFT ABUTMENT

m3

120

9,000

3,000

4,000

19,000

14%

CENTER PIER

m3

100

7,000

200

1,000

10,000

12%

RIGHT ABUTMENT m3

120

9,000

4,000

2,000

19,000

19%

DECK

m3

140

12,000

3,500

1,500

20,000

13%

PRE-CAST SPAN

m3

job

10,000

12,000

6%

FINISHES

m3

job

50,000

60,000

12%

Solution:
Construction cost = direct cost * 1.10
Tender price
= construction cost * 1.15
= 1.10 * 1.15 * direct cost
1) tender price = 1.265 D.C.
total direct cost
= 116,200
construction cost
= 127,820
tender price
= 146,993

X 1.1

X 1.15

case 1
Direct

construction

item

cost

cost

price

16,000

17,600

20,240

8,200

9,020

10,373

15,000

16,500

18,975

17,000

18,700

21,505

10,000

11,000

12,650

50,000

55,000

63,250

Totals

116,200

127,820

146,993

No.

Contingency calculation

2
x case
case 2

1
1

construction
construction
cost
cost
17,600
17,600

max
max
cost
cost
19,000
19,000

max.
max.
risk
risk
1,400
1,400

%
%
prob.
prob.
14%
14%

net
net
risk
risk
196
196

9,020

10,000

980

12%

16,500

19,000

2,500

18,700

20,000

11,000

55,000
127,820

No.
No.

Total

expected

final item

Cost

price

17,822.73

20,496.14

117.6

9,134.15

10,504.27

19%

475

16,708.81

19,215.13

1,300

13%

169

18,936.65

21,777.15

12,000

1,000

6%

60

11,139.21

12,810.09

60,000

5,000

12%

600
1617.6

55,696.03

64,050.43

129,437.56

148,853.20

From the table above

amount of contingency to be added = 1617.6
contingency as % of total construction cost = (1617.6/127,820)*100 = 1.265 %
Total cost with contingency = 127,820 * 1.012655
= 129,437.56
Tender price with contingency = 129,437.56 * 1.15 = 148,53.2

Q1-Select the best answer for each of the following sentences:

1. The invitation to bidding should include:

A)Drawings. B)Specifications. C)Initial and final bond. D)Bill of Quantity

2. In a certain highway project, the contractor decided to add site

overhead equal to 15% of direct cost, general overhead equal to
5% of construction cost, and profit & risk equal to 5% of net cost.
The price factor should equal:
A)1.25

B) 1.0

C) 1.2678

D)25%

3.The Profit & Risk is added to the project cost by the:

A)Estimator. B)Owner. C)Architect/Engineer. D)Senior manager.

4.The supplementary conditions may include:

A)Project duration. B)Payment system. C)Claims and change orders

system. D)All the above.

5. Contract documents do not include:

A)Drawings. B)Priced Bill of Quantity. C)Letter of offer. D)Contract

conditions.

Questions?

28