7 Rules of Construction Estimation

1. Define the The term ‘estimation’. In the construction

industry, it is typically used in relation to the approximate
costs associated with a construction project, used, for
example to assess the viability or affordability of the
project or aspects of it.
2. Breakdown the construction project in the following
categories:
o Facilitating works
o Building works
o Contractor’s preliminaries
o Contractor’s overheads and profit
o Construction cost
o Fees
o Other development/project costs.
o Risk allowances
o Inflation
3. Once you define and divide the construction project in the
above mentioned categories, the next step is to measure and
takeoff the building quantities (e.g. excavation, concrete,
masonry etc.).
4. Price all measure works by using rates from other Projects
to form a raft estimation of the Construction Costs (if old
rates are used, is vital to allow for inflation). Sometimes
educated assumptions are made to cover works that are
impossible to measured at the time of the estimation. Also,
 at this point you must include a percentage against the
established Construction Cost usually 15% to cover
Contractors Preliminaries and Overhead.
5. Moreover, Professional fees (e.g. Architects, Quantity
Surveyor & Other Consultant such as Civil & MEP
Engineers) must be included within the estimation and you
must include a percentage usually 15% against the
established Construction Cost to cover those fees
(generally: Architects 9%, Quantity Surveyor 2% & Other
Consultant 2% each)
6. Importantly you should include other costs that are not
necessarily directly associated with the cost of constructing
the building, but form part of the total cost of the building
project to the employer (e.g. land acquisition costs, fees for
letting agents, marketing costs and contributions associated
with planning permissions).
7. Cross evaluate the numerous Contract’s available (e.g.
Lump Sum vs Design & Build vs Management
Contracting) to identify the risk allocation between the
Parties and therefore provide an estimated amount to cover
any potential risks.