Detailed Cost Estimating: Dr. Hany Abd Elshakour

Detailed Cost Estimating
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١

Types of Cost Estimates
Cost estimates may be divided into at least two different
types, depending on:
1. The purposes for which the estimates are prepared,
and the needs of the user for the estimate.
2. The amount of information known when the estimates
are prepared.
3. The time available to prepare the estimate.
There are approximate estimates (sometimes called

parametric, preliminary, conceptual, rough order of
magnitude, or budget estimates) and detailed estimates
(sometimes called final, or definitive estimates). Each of
these may be subdivided.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٢
Types of Cost Estimates
Cost Estimates
Preliminary Detailed Cost

Cost Estimates Estimates
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٣

Estimating Types through Project Phases
Project Concept Preliminary Detailed Tender Construction
Phase Stage Design Design Preparation
Estimate Preliminary Elemental Unit Rate

Type and + 50 or +15% or
Accuracy -25% to Operational
+75% -5% to
+10%
Cost per Assemblies Quantity
Square Cost Take off,
meter,….. Method
statement,
and
Production
Rate
Order of Magnitude Detailed Method
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٤

Final (Detailed) Cost Estimating
Final: The final cost estimate of a project is prepared when
finalized working drawings and specifications are available.
Detailed: It depends on making cost analysis for each work
item in details.
Basis: accurate assessment of
the quantity of work that can only be obtained from the
full design of the project.
The construction method selected to perform the task.
the costs of the materials, labor, equipment, subcontract
work, overhead, and profit.
When and by whom: Prepared by contractors from a
complete set of (final) bidding documents prior to
submission of the bid to the owner in the highly competitive
construction industry.
An accurate forecast of the costs of building
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aElshakour
Dr. Hany Abd project (+5%).
٥
Types of Detailed Cost Estimates
Detailed Cost
Estimates
Unit Rate Operational

Estimating Cost estimating
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Detailed Cost Estimates
1) Unit Rate Estimating

Basis: The selection of the resources required and the
selection of the output or usage rate for those resources.
It combines the output rates with the cost information
collected (all-in labor rate, all-in plant rate, material costs,
etc.) to produce the direct cost rate.
Labor Cost =
(Quantity of Work / Production Rate) * All-in Labor rate, or
(Quantity of Work * Unit Rate) * All-in Labor rate
Equipment Cost =
(Quantity of Work / Production Rate) * All-in Plant rate, or
(Quantity of Work * Unit Rate) * All-in Plant rate
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٧
Detailed Cost Estimates
2) Operational Estimating
Used extensively in civil engineering works because this
method links well with Time Planning and is effective in
allowing for Idle Time which is common in most plant
dominated works.
Operational estimating would base the costs of the plant
on the time that the plant was on site (elapsed time),
not on an assumed output rate.
The time the plant was on site would be derived from the
construction program.
In building construction works the operational estimating
can be used in estimating the cost of pumps, tower
cranes…
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٨
Example
A bid for a hospital project was advertised in the newspaper. The
hospital consists of three buildings. After reviewing the bidding
documents, the quantity of excavation for the three buildings
according to the B.O.Q were as follow:
Building (1): 1000 m3
According to the construction method selected, the equipment
used for the excavation activities consists of one excavator and
three trucks with a production rate of the crew equals 200 m3
/day.
The rental rate of the excavator = L.E. 1000/ day
The rental rate of one truck = L.E. 300/day/truck
Estimate the equipment cost of excavation per cubic meter using
unit rate estimating method.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٩
Example
If you know that, the program utilized by the contractor for excavation
activities is illustrated in the bar chart below. The equipment crew will
stay in the project and can not be transported outside the project
during the excavation time. Estimate the equipment cost of excavation
per cubic meter using operational cost estimating method.
Activity Duration 1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 3 3 3 3
(Day) 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3
Excavation build. 1 5
Demolition for build. 2 10
P.C for build. 1 2
R.C. for build. 1 9
P.C for build. 2 3
R.C. for build. 2 14
……………………………..
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٠
Example: Unit Rate Estimating
Equipment Cost =
(Quantity of Work / Production Rate) * Daily Equipment Costs
Equipment Cost for Building (1) = [1000 / 200] * [1000 + 3 * 300]

= 5 * 1900 = L.E. 9500

= 10 * 1900 = L.E. 19000

= 13 * 1900 = L.E. 24700
Total cost of excavation = L.E. 53200

Cost per cubic meter of excavation = 53200 / 5600 = 9.5 L.E./ m3
Total
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7:15 PM of excavation = 28 days. Dr. Hany Abd Elshakour ١١
Example: Operational Estimating
Total cost of excavation
= Elapsed time of equipment * daily equipment rate
= 33 days * 1900 L.E./day = L.E. 62700
Cost per cubic meter of excavation = 62700 / 5600

= 11.2 L.E./ m3
Results Comparison
Criteria Unit Rate Estimating Operational Estimating
Cost of Excavation L.E. 53200 L.E. 62700
Cost per Unit 9.5 L.E./m3 11.2 L.E./m3
Price (price F. = 1.3) L.E. 69160 L.E. 81510
Unit Price (price F. = 1.3) 12.4 L.E./m3 14.6 L.E./m3
Total time 28 days 33 days
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Systematic Procedure of Detailed Cost Estimating
The tasks of detailed cost estimating may include:

1. Plan and schedule the cost estimating process
2. Review bidding documents, visit the project site, and attend
meetings
3. Create a detailed WBS
4. Take off the quantities of materials
5. Evaluate and select the best method of construction
6. Obtain and analyze bids from suppliers, and subcontractors,
collect and calculate all-in labor rate, all-in plant rate, material
costs, and subcontractors' costs
7. Assess the output rate of selected resources and elapsed time of
deployed resources
8. Develop a general time schedule of the project
9. Calculate the direct cost and site overheads
10. Prepare the estimator's report
11. Calculate general overheads, taxes, bonds, and insurance
12. Determine contingency and profit
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PM the tender price and the unit price ofAbd
Dr. Hany each item
Elshakour ١٣
Plan and schedule the cost estimating tasks
• Review the scope of the project

• Analyze bidding documents Perform detailed WBS
Drawings, Specifications, Bill
of quantities, ……..
• Visit the site, Take off the quantities for WBS elements
• Attend meetings,
• Obtain and analyze bids from suppliers

Select the most appropriate construction method
• Obtain and analyze bids from specialty
contractors/ subcontractors
Estimate production rate of selected resources and • Collect and calculate all-in labor rate,
elapsed time of deployed resources all-in plant rate, material costs, and
subcontractors' costs
Develop a general time schedule of the project
Estimate the direct cost for each item and the site
overheads of the project
Calculate taxes, bonds, insurance, and overhead
Determine contingency and profit
Calculate thePM
4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ١٤
Plan and Schedule Cost Estimate Process
The careful reading of the bidding documents by the
estimator will enable him to:
Obtain an overall concept of the project
Establish the level of assistance required from other
departments, e.g. planning, purchasing and equipment
departments
Identify the required time to accomplish the cost
estimate process
Determine key dates for sending out of inquires and
receipt of quotations, for visiting site, for submitting the
tender, etc.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٥

Plan and Schedule Cost Estimate Process
Time for cost estimating varies with the amount and
complexity of the work but, on average, an estimator
spends two to three weeks on an estimate.
Larger projects may call for the combined effort of a team

of estimators.
To accomplish the project cost estimate by a designated

date, a time plan for the activities/tasks to be performed
in the cost estimating process should be developed.
Bar chart technique is a proper scheduling technique for

developing a cost estimate schedule.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٦


Calculate thePM
4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ١٧
Review the Project Scope, and Analyze Bidding Documents
The Scope Statement of the project provides the product

description, key deliverables, acceptance criteria, product
boundaries, assumptions, and constraints about the project.
An in-depth review of the Bidding Documents should be

performed at early stage. This review includes:
Reviewing Drawings and Specifications to
recognize the work to be done and the possible
problems (dewatering, constructability, etc).
Reviewing Contract Conditions, particularly the
clauses that might affect the cost of the work (such as
safety and health, security, performance,
environmental, insurance, and permits) or payment
for the work done.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٨
Review the Project Scope, and Analyze Bidding Documents
Analyzing the Soil Report to disclose the type of soil that

will probably be found at the site, and provides an
indication of the moisture content of this soil.
An estimator is cautioned to read the Bidding Documents

carefully to determine the true status of the soils report.
During the review, the estimator will uncover details that

require clarification by the designer. The estimator should
compile a list of all the questions that arise, the query
list, then later seek clarification from the designer/
consultants.
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4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ٢٠
Visit the Site, and Attend Meetings
The characteristics of the particular site where the
building is to be constructed play an important role in
estimating project costs.
As result of the site visit, the estimator prepares a report
or set of notes, which includes at least the following:
Description of the site and access to it,
Available space for storage of materials,
Positions of existing services/ underground utilities,
Description of ground conditions,
Assessment of the availability of labor,
Any problems related to the security of the site,
Topographical details of the site,
Description of the facilities available for the disposal of
spoil, and
Description of any demolition works or temporary works to
adjoining
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Photographs or videos should be taken on the site visit
since the condition of the site may change in the time
between the bid and the start of work.
The condition of structures adjacent to the site should
be carefully documented and photographed at this
time, especially if these structures are in poor condition.
Special attention should be paid to the possibility of soil
contamination in the location of the site.
During site visit, meetings can be held with the client,
consultant, architect, or their representatives to discuss
and clarify any unclear aspects of the drawings,
specification, and contract conditions or any other
queries.
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4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ٢٤
Perform Work Breakdown
A work breakdown structure (WBS), is a deliverable-oriented
decomposition of a project into smaller components.
A WBS is a deliverable or product-oriented grouping of project

work elements shown in graphical display to organize and
subdivide the total work scope of a project.
A WBS provides the necessary framework for effective project

estimating, planning, execution, controlling, and reporting.
A WBS permits summing of subordinate costs for tasks,

materials, etc., into their successively higher level “parent”
tasks, materials, etc.
An important design principle for work breakdown structures is

called the 100% rule.
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Perform Work Breakdown
A well-organized checklist of work items for a building
construction project is the MASTERFORMATE from the
Construction Specification Institute (CSI).
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Dr. Hany Abd


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4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ٢٨
Quantity Survey
Reasons for quantity takeoff
for lump-sum bidding, the bidding documents may not
include quantities of work.
for unit-price bidding, most bid items cannot be priced
without breaking the work down into smaller
subdivisions.
the A/E’s quantity estimates are specifically stated to
be approximations only.
making the quantity survey provides the estimator
with the close familiarity of job requirements so vital to
realistic project pricing.
The prime contractor normally limits its takeoff to work

items it might carry out with its own forces.
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4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ٣٠
Select Method of Construction
Many activities have alternative methods of accomplishment.
They include using various levels of resource capability or
skills, different size or type of machines, different tools (hand
versus automated), and make-rent-or-buy decisions regarding
the resource.
It is preferable to make enough studies to select the most

suitable method of construction.
Factors to be considered when selecting of the best

construction method include:
Cost
Time
Resource availability
Quality of finished work
Safety
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4/19/2016 7:15 tender price and the unit price of each item Dr. Hany Abd Elshakour ٣٢
Develop a General Time Schedule
When a new project is being estimated, it is necessary
that a general time schedule be devised.
Many items of the job overhead expense are almost

directly dependent on the duration of the construction
period.
When a calendar dates of work operations is determined,

the time periods required for each of the major job parts
can be established as well as the kinds of weather to be
anticipated. This provides information about labor and
equipment productivity, hot and cold weather operations
and other such matters.
4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٣٣

Detailed Cost Estimating: Dr. Hany Abd Elshakour

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Detailed Cost Estimating

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١

There are approximate estimates (sometimes called

Preliminary Detailed Cost

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٣

Estimate Preliminary Elemental Unit Rate

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٤

Unit Rate Operational

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٦

1) Unit Rate Estimating

Demolition for build. 2 10

P.C for build. 1 2

R.C. for build. 1 9

P.C for build. 2 3

R.C. for build. 2 14

Equipment Cost for Building (1) = [1000 / 200] * [1000 + 3 * 300]

Equipment Cost for Building (2) = [2000 / 200] * [1000 + 3 * 300]

Equipment Cost for Building (3) = [2600 / 200] * [1000 + 3 * 300]

Total cost of excavation = L.E. 53200

Cost per cubic meter of excavation = 62700 / 5600

The tasks of detailed cost estimating may include:

• Review the scope of the project

• Obtain and analyze bids from suppliers

Develop a general time schedule of the project

Calculate taxes, bonds, insurance, and overhead

Determine contingency and profit

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٥

Larger projects may call for the combined effort of a team

To accomplish the project cost estimate by a designated

Bar chart technique is a proper scheduling technique for

• Review the scope of the project

• Obtain and analyze bids from suppliers

Develop a general time schedule of the project

Calculate taxes, bonds, insurance, and overhead

Determine contingency and profit

The Scope Statement of the project provides the product

An in-depth review of the Bidding Documents should be

Analyzing the Soil Report to disclose the type of soil that

An estimator is cautioned to read the Bidding Documents

During the review, the estimator will uncover details that

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ١٩

• Review the scope of the project

• Obtain and analyze bids from suppliers

Develop a general time schedule of the project

Calculate taxes, bonds, insurance, and overhead

Determine contingency and profit

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٢٢

• Review the scope of the project

• Obtain and analyze bids from suppliers

Develop a general time schedule of the project

Calculate taxes, bonds, insurance, and overhead

Determine contingency and profit

A WBS is a deliverable or product-oriented grouping of project

A WBS provides the necessary framework for effective project

A WBS permits summing of subordinate costs for tasks,

An important design principle for work breakdown structures is

4/19/2016 7:15 PM Dr. Hany Abd Elshakour ٢٦

• Review the scope of the project

• Obtain and analyze bids from suppliers

Develop a general time schedule of the project

Calculate taxes, bonds, insurance, and overhead

Determine contingency and profit

The prime contractor normally limits its takeoff to work