Today’s Agenda (Feb.

4, 2004)

• Techniques for:
– Detailed Unit Cost Estimating
– Production Rate Estimating
– Assembly Cost Estimating
– Conceptual Cost Estimating
– Design Cost
– Computer-based Estimating
• Estimating Formats and Organization
• Steps and Components of Estimates
• Indirect Costs

CEE 241: Techniques of Project Planning and Control

Purpose of Cost Estimating

• Go/no go decision to build project

• Basis for evaluation of alternatives
• Establish bid price
• Establish construction budget
• Forecast probable actual cost
• Tool for planning project
• Establish cost impact of design changes
…
Purpose of Cost Estimating
• Estimates are created by different people
for different reasons at different times with
different levels of detail
– Architect / Consultant to understand cost
– GC to get project, control project
– Owner / CM / Architect to monitor project
– Subcontractor to get project, control project,
price change orders
• On average, each building component is
estimated seven times during a project
(Laitinen 1998)
Accuracy of Estimates
Order of Magnitude Estimate
20% S.F. & C.F. Estimate
Accuracy

15% System/Assembly Estimate

10% Unit Cost Estimate

5%
10 min.

3 weeks
1 hour

1 day

Estimated Time for a $2,000,000 Building

(R.S. Means 2000)
 Cost Estimating
Scope = Cost
•Index Number
Building type defined •Cost-capacity factor
Feasibility e.g. 20,000 sf •Overall Parameter
Laboratory

•Detailed Parameter Costs

Preliminary Building systems
Design defined, e.g., trusses
as structural system

•Assembly Method (Parameter

Building components and Partial Takeoff Methods)
Design defined,
Development e.g., spread footings

Building Components •Unit Cost Method

Detailed
Design Detailed, •Production Rate Method
e.g., spread footing w/
3,000 psi concrete
 Unit Cost vs. Production Rate Methods
SCOPE

Qu
st

an
Ac y /
Co

tit
tiv Pro
it
y* =

ity du
Un
tit st
an Co

Du cti
ra vit
tio y
n = Rat
Qu

COST TIME

e
Labor or Equip Cost =
Activity Duration * Cost/Unit of Time
Adapted from Oberlender (1993)

Detailed Cost Estimating: Detailed Design

 Detailed Design

Takeoff for Footing Formwork:

6 x 4’ x 4’-6” x 1’-6”

/ 085 21
162 sfca

x x0
37
0. .0
5 mh ch /
sfc /
a
sfc

a
/ fca a
/

da
1

s
.2

y OR
OR
$2

sfc
$358 0.432 days
$357 x $826.80
$356 x $25.84 13.77 mh
$351 x $103.35 3.40 ch
 Detailed Design

Unit Cost Method

Shows costs for all elements in each building component

Example:
Calculate the construction cost for all elements in the
grade beam

Detailed Cost Estimates

Detailed Cost Estimates
 Detailed Design

Unit Cost Method

Shows costs for all elements in each building component

Solution: Explicit?
Prod. Unit
CSI Number Description Takeoff Unit Qty Cost
Rate Cost
Forms in place, grade
03110 435 0010 2 x 2'-4" x 25' = 117 sf sfca 530 117 $4.02 $470.34
beam, plywood, 1 use
ties: #4, 18" oc:
(25'/1.5' + 1) = 18 ties
>> 18 x 8' = 144 lf
>> 144 lf x 0.668 lb/lf = 96 lb
Reinforcing in place, longitudinal #5:
03210 600 3250 ton 2.10 0.12 $1,010 $122.21
Footings, #4-#7 4 x 25' = 100 lf
>> 100 lf x 1.043 lb/lf = 104 lf
dowels #4, 18" oc:
18 x 3.5' = 63 lf
>> 63 lf x 0.668 lb/lf = 42 lb
Concrete, Ready mix,
03310 220 0200 (25' x 2' x 2'-4") / 27 = 4.31 cy cy n/a 4.31 $64.50 $278.00
3500 psi
Placing Concrete, Grade
03310 700 3250 (25' x 2' x 2'-4") / 27 = 4.31 cy cy 180 4.31 $12.57 $54.18
Beams, Pumped

Reference Means Building Construction

Cost Data 2000, pg. 95, 106, 109, 111
Grade Beam Assembly in Precision Estimating Extended

Note the different parts of the assembly:

Rows: individual cost items
Columns: phase and item number (according to CSI codes),
description, unit of measure, formula to calculate the
specific quantity for each item from the assembly takeoff
values
 Detailed Design
Production Rate Method
Focuses on labor and equipment (time-based) costs for each
building component or estimating item
SCOPE

Qu
t
os

a
Ac y /
nt
C
From Triangle:

tiv Pro
it
it
y* =
Un
tit st

ity du
an Co
Unit Cost Method:

Du cti
rat vit
(1) Cost = quantity * unit cost

ion y R
Qu

= ate
Production Rate Method: COST Labor or Equip Cost = TIME
Activity Duration * Cost/Unit of Time
(2) Duration = quantity / production rate
(3) Cost = duration * wage
(4) Unit cost = wage / production rate

*Substitute (2) and (3) and set equal to (1):

Quantity * unit cost = quantity / production rate * wage
Detailed Cost Estimates
 Detailed Design

Production Rate Method

Example:
Clough & Sears & Sears, Place Concrete Abutment, pages 38-39.

(2) Duration = quantity / production rate = (280 cy) / (8.75 cy/hr) = 32

hrs

(3) Cost = duration * wage = (32 hrs) * ($242/hr) = $7,744

Alternatively,
(4) Unit cost = wage / production rate = ($242/hr) / (8.75 cy/hr) =
$27.66/cy
(1) Cost = quantity * unit cost = (280 cy) * ($27.66/cy) = $7,744

Detailed Cost Estimates

 Assembly Costs
Shows costs for each building component based on typical design

Example:
Calculate the construction cost for a spread footing

Solution:
Reference Pg. 2 of RS Means Assemblies Cost Data

Preliminary Cost Estimates: Design Development

Break the project
into manageable,
trackable pieces
(i.e., is it done?)

ISSUES:
Assume some of the
detailed quantities,
e.g., 150 kg of
rebar per m3 of
concrete

Transitions or
interfaces may not
be handled very
well
 Estimating Formats
Unit
Uniformat # Description Qty Unit Cost
Cost
1. Foundations
1.1-140 Spead Footings
1.1-120 7150 Load 50K, soil capacity 3 ksf, 4'-6" sq. x 12" deep 6 ea $216.50 $1,299
.
3. Superstructure
3.1-130 Steel Columns
3.1-130 5800 Load 200k, Unsupported height = 10' 60 vlf $42.95 $2,577
.
Building components defined, 12 Sitework
e.g., spread footings, column TOTAL
UNIFORMAT
CSI Number Description Qty Unit Mat'l Labor Equip Cost
1. Foundations
.
3. Concrete
03110 Structural CIP Forms
03110 430 5000 Forms in place, footings, 1 use 192 sfca $1.69 $2.80 $862.08
03210 Reinforcing Steel
03210 600 3250 Reinforcing in place, Footings, #4-#7 0.20 ton $530 $480 $202.00
Building Component Detailed, 03310 Structural Concrete
e.g., spread footing w/ 03310 220 0200 Concrete, Ready mix, 3500 psi 7.1 cy $64.50 $457.95
03310 700 2450 Placing Concrete, footings, Pumped 7.1 cy $23.50 $11.25 $246.73
3,000 psi concrete… .
5. Metals
MASTERFORMAT 05120 Structural Steel
05120 260 7000 W10X45 60 lf $38.50 $1.67 $0.99 $2,469.60
.
16 Electrical
TOTAL
Organization of Estimating Information
• Uniformat • Masterformat
1. Foundations 1. General Requirements
2. Substructure 2. Sitework
3. Superstructure 3. Concrete
4. Exterior Closure 4. Masonry
5. Roofing 5. Metals
6. Interior Construction 6. Wood & Plastic
7. Conveying 7. Thermal & Moisture Protection
8. Mechanical 8. Doors & Windows
9. Electrical 9. Finishes
10. General Conditions 10. Specialties
11. Special Construction 11. Equipment
12. Sitework 12. Furnishings
13. Special Construction
14. Conveying Systems
15. Mechanical
16. Electrical
 Scope = Cost
Building type defined
•Index Number
e.g. 45,000 sf •Cost-capacity factor (cost/fx)
Feasibility college facility •Overall Parameter (unit area,
index number)

•Detailed Parameter Costs

Building systems
Preliminary defined, e.g., (SF Method, Panel or model)
Design trusses as structural
system

•Assembly Method (Parameter

Building components and Partial Takeoff Methods)
Design defined,
Development e.g., spread footings

Building components •Unit Cost Method

Detailed
Design detailed, •Production Rate Method
e.g., spread footing w/
3,000 psi concrete

Cost Estimating (extends pages 28/29 in Clough, Sears & Sears)

Conceptual Estimating

• Basis for business decisions and design decisions

• Based on limited scope definition
• High potential for scope changes
• Results often “cast in stone”
• First in a series of estimates
 Conceptual Estimates
Scope = Cost
•Index Number

Feasibility •Cost-capacity factor

x
Costnew = Costold * (CapacityNew/Capacityold)
Building type defined
e.g. 45,000 sf college • Overall Parameter
facility
Costnew = Costold * cost parameter
e.g. cost = 45,000 sf * $189/sf * 1.17 = $10M
• Detailed Parameter Costs
1. Foundations
2. Substructure (45,000sf * $3.27/sf) = $147,150
3. Superstructure
Preliminary
Design .
9. Electrical = $900,000
Building systems defined, .
e.g., trusses as structural
12. Site Work ________
system
Use, e.g., Model Buildings from MEANS SF Data
 Index Number Estimates
Show changes in cost over time (and location)

Example:
Calculate the construction cost in 2000 of a building in
San Francisco, CA that was built in 1978 for $3.2 Million.
Index 2000 Cost 2000 Index S.F., CA in 1978 = 62.6
Index 1978 Cost 1978 Index S.F., CA in 2000 = 146.7

146.7 x $3,200,000 = Cost 2000 = $7,499,042

62.6

The “Related Links” section on the class website has a

link to the ENR Building Construction Cost Indexes.
 Cost Capacity Factor Method

Shows changes in Cost over Scope (capacity)

‘Economies of Scale’

Costnew = Costold * (CapacityNew/Capacityold)X

X ≈ 0.9 with small economies of scale
X ≈ 0.6 with large economies of scale

Combine with cost and location indices to adjust for

inflation or location
x
Costnew = Costold*( Inew / Iold )*(CapacityNew/Capacityold)
Cost Capacity Factor Method - Example
• The total cost of a sewage plant with a capacity of 50
million gallons per day (mgd) completed in 1998 in
Denver, Colorado was $37.8M. A similar treatment
plant with a capacity of 80 mgd has been proposed in
Newark, New Jersey for completion in 2002.

• Estimate the cost of the proposed plant given:

• The Colorado project required special site preparation
costing $1.2M.
• The cost-capacity factor for the proposed type of plant
is 0.5.
• Installation of equipment to satisfy new environmental
standards costs an additional $1.6M for the NJ plant.
• Assume inflation rate from 1998 to 2002 is 3% per year.
• The location index is 0.94 for CO and 1.12 for NJ.
 Cost Capacity Factor Method - Solution
1) Calculate cost of typical 50 mgd plant in CO in 1998:
$37.8M – $1.2M = $36.6M

2) Calculate the cost of typical 50 mgd plant in CO in 2002:

$36.6M * 1.034 = $41.2 M

3) Calculate cost of typical 50 mgd plant in NJ in 2002:

1.12/0.94 * $41.2M = $47.7M

4) Calculate cost of typical 80 mgd plant in NJ in 2002:

$47.7M * (80/50).5 = $60.3M

5) Adjust cost of typical 80 mgd plant in NJ for special

features:
$60.3M + $1.6M = $61.9M
Capacity Factor Method
Relate early known component cost to overall project
cost for installation of that component
Used on industrial projects w/ major equipment

Total
Item Item Cost Factor
Installed Cost

Blowers and Fans $10,000 X 2.5 $25,000

Compressors 50,000 X 2.3 115,000
Furnaces 100,000 X 2 200,000
Heat Exchangers 80,000 X 4.8 384,000
Instruments 50,000 X 4.1 205,000
Motors, Electric 60,000 X 8.5 510,000
Pumps 20,000 X 7 140,000
Tanks 125,000 X 2.4 300,000
Towers 200,000 X 4 800,000

Total $695,000 $2,679,000

 Overall Parameter Costs
Shows change in cost based on capacity (size)

Costnew = Capacitynew * Cost Parameter

Example:
Calculate the current construction cost of a 45,000 sf college
facility.

Costnew = 45,000 sf * $189/sf * 1.17 = $9,950,850

city cost index

Parameter cost from RS Means

Building Construction Cost Data 2000,
Colleges – Engineering, 75% Value
Page 473
Detailed Parameter Costs
Shows costs for each system based on typical design

Example:
Calculate the estimated construction cost of a 45,000 sf
college facility.

Solution:
Reference Pg. 107 of RS Means Square Foot Costs for College,
Laboratory
 Estimating Steps
• Review plans, drawings, specifications
• Gather pricing information (such as productivity rates,
unit prices, subcontractor bids)
• Quantity takeoff
• Determine construction method
• Break down project, establish line items, level of detail
• Calculate material, labor, equipment costs
• Add Markup (overhead and profit)
• Add Bonds, interest, etc.
• Calculate cost per line item
• Aggregate and sum line items
• Group line items according to contract or bid format
 Components of a cost estimate

Detailed Cost Estimates

CONSTRUCTION COSTS
Division
1. General Requirements
Job $ 95,000
2. Sitework (Building Excavation, Etc.) $ 375,000
2A. Firehouse Demolition (See Note 1) $ -0-
• Overhead:
3. Concrete $ 211,796 1. Job Organization
4. Masonry $ 245,200 (superintendent, PM, etc.)
5. Metals $ 98,824
2. Travel
6. Woods & Plastics $ 112,002
7. Thermal & Moisture Protection $ 146,877
3. Engineering
8. Doors & Windows $ 136,244 4. Testing
9. Finishes
Office
$ 186,875 5. Equipment
10. Specialties $ 97,875
6. Field Offices
11. Special Equipment (see below) $ -0-
12. Furnishings (see below) $ -0-
7. Temporary Utilities
13. Special Construction (radio tower) $ 25,000 8. Winter Protection / Temp
14. Conveying Systems $ -0- Structures & Storage
15. Mechanical Systems $ 469,460
9. Signage
16 Electrical Systems $ 312,000
Construction Cost Estimate 2,512,153 10. Cleanup
Sales Tax $ 179,722 11. Permits
Overhead & Profit $ 375,000
Contingency $ 120,000 12. Insurance
Adjustments. $ 40,000 13. Bonds
Total $3,226,875
14. Etc.
 Assumptions for estimating…

• Economic condition stable

• Labor available and reliable
• Weather
• Reasonable project participants
• Historical costs are accurate and applicable
• Productivity will be consistent
• Soil conditions
• Contract fine print
• Accurate design
• Knowledge of existing structures

Detailed Cost Estimates

Sources of Mistakes

• Different units for same line items

• Double count same items
• Omissions (testing, reinforcement chairs)
• Misinterpretation
• Take-off error
• Construction methods not compatible with field
conditions
• Too optimistic
• Too much time on small items
….
Methods to estimate design costs
• Fixed fee vs. guaranteed max vs. incentive vs. hourly
• % of construction
– A larger project requires more design effort
– Incentive to save costs?
– Need overall project scope and cost early
– What about the project schedule?
• Hours
– It costs what it costs
– Blended rate
– Need resource loaded design schedule (linked to or driven by procurement
and construction schedule)
• # of drawing sheets
– Historical data: for this size job we need this many sheets at this many
hours per sheet
– Antiquated?
• How do you know whether design is 60% or 70% done?
Reading Questions: Chapter 2
Project cost accounting and other
project reporting systems are good at
describing what has happened. Are they
useful for predicting future problems and
allowing preventative action to be
taken? How would a cost and
productivity report be used to predict a
schedule conflict between trades?
Reading Questions: Chapter 3
Estimating is both an art and a science. Part
of the art is to account for uncertainty in
production rates, weather conditions, etc.
Sometimes, the cost of these uncertainties is
accounted for by marking up the direct costs
by a contingency fee. In other cases, the cost
of uncertainty is accounted for implicitly or
explicitly in unit cost rates. What types of
uncertainty exist in construction projects,
and how should they be included in an
estimate? What might be done to accurately
assess the magnitude of each type of
uncertainty?