Mashrique Adnan

扬州大学

YANGZHOU UNIVERSITY

Civil Engineering Cost

Department School of Architecture and Civil Science

Major Civil Engineering

Name

Chinese Name

ID

Date 1/14/2022

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1 Construction Cost Estimating and Cost Control Overview

1.1 Introduction to Cost Estimating and Cost Control

Cost Estimating: A cost estimate is the approximation of the cost of a program, project, or
operation. The cost estimate is the product of the cost estimating process. The cost estimate
has a single total value and may have identifiable component values. A problem with a cost
overrun can be avoided with a credible, reliable, and accurate cost estimate. 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. Other professionals such as quantity surveyors and cost engineers may also
prepare cost estimates or contribute to cost estimates.

Cost Control: Cost control is the practice of identifying and reducing business expenses to
increase profits, and it starts with the budgeting process. As an example, a company can
obtain bids from different vendors that provide the same product or service, which can lower
costs. Cost-control management can help you clearly identify activities running smoothly and
staying within budget from the ones constantly breaking down and consuming extra dollars.
Cost control is an important factor for maintaining and growing profitability.

1.2 Design in the Construction Industry

In the planning of facilities, it is important to recognize the close relationship between

design and construction. These processes can best be viewed as an integrated system. Broadly
speaking, design is a process of creating the description of a new facility, usually represented
by detailed plans and specifications; construction planning is a process of identifying
activities and resources required to make the design a physical reality. Hence, construction is
the implementation of a design envisioned by architects and engineers. In both design and
construction, numerous operational tasks must be performed with a variety of precedence and
other relationships among the different tasks.

Several characteristics are unique to the planning of constructed facilities and should be kept
in mind even at the very early stage of the project life cycle. These include the following:

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 Nearly every facility is custom designed and constructed, and often requires a long
time to complete.

 Both the design and construction of a facility must satisfy the conditions peculiar to
a specific site.

 Because each project is site specific, its execution is influenced by natural, social
and other locational conditions such as weather, labor supply, local building codes,
etc.

 Since the service life of a facility is long, the anticipation of future requirements is
inherently difficult.

 Because of technological complexity and market demands, changes of design plans

during construction are not uncommon.

In an integrated system, the planning for both design and construction can proceed almost
simultaneously, examining various alternatives which are desirable from both viewpoints and
thus eliminating the necessity of extensive revisions under the guise of value engineering.
Furthermore, the review of designs with regard to their constructability can be carried out as
the project progresses from planning to design. For example, if the sequence of assembly of a
structure and the critical loadings on the partially assembled structure during construction are
carefully considered as a part of the overall structural design, the impacts of the design on
construction false work and on assembly details can be anticipated. However, if the design
professionals are expected to assume such responsibilities, they must be rewarded for sharing
the risks as well as for undertaking these additional tasks. Similarly, when construction
contractors are expected to take over the responsibilities of engineers, such as devising a very
elaborate scheme to erect an unconventional structure, they too must be rewarded
accordingly. As long as the owner does not assume the responsibility for resolving this risk-
reward dilemma, the concept of a truly integrated system for design and construction cannot
be realized.

1.3 Types of Cost Estimates

Design Estimates:

 Screening estimates (or order of magnitude estimates)

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 Preliminary estimates (or conceptual estimates)

 Detailed estimates (or definitive estimates)

 Engineer's estimates based on plans and specifications

 For each of these different estimates, the amount of design information

available typically increases

Bid Estimates:

 Subcontractor quotations

 Quantity takeoffs

 Construction procedures

Control Estimates

 Budget estimate for financing

 Budgeted cost after contracting but prior to construction

 Estimated cost to completion during the progress of construction.

1.3.1 Overview of the Types of Cost Estimates

The U.S. Government Accountability Office (GAO) defines a cost estimate as "the
summation of individual cost elements, using established methods and valid data, to estimate
the future costs of a program, based on what is known today". The GAO reports that "realistic
cost estimating was imperative when making wise decisions in acquiring new systems."[2] A
cost estimate is often needed to support evaluations of project feasibility or funding
requirements in support of planning. A cost estimate is often used to establish a budget as the
cost constraint for a project or operation.

In project management, project cost management is a major functional division. Cost

estimating is one of three activities performed in project cost management. In cost
engineering, cost estimation is a basic activity. A cost engineering reference book has
chapters on capital investment cost estimation and operating cost estimation. The fixed

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capital investment provides the physical facilities. The working capital investment is a
revolving fund to keep the facilities operating. In construction contracting, a cost estimate is
usually prepared to submit a bid or tender to compete for a contract award. In an attempt to
manage liability risk, some firms avoid the use of the word estimate and instead refer to the
estimate as an "Opinion of Probable Cost.

1.3.2 Cost Indices

Construction Cost Index is an indicator of the average cost movement over time of a fixed
basket of representative goods and services related to Construction Industry. Formation
Process is down below

• Identification of the base year;

• Identification of the item basket;

• Allocation of weights at item, groups/ subgroups level;

• Statistical Analysis for the number evaluation;

• Publishing the Indices;

• Data management and warehousing.

Laspeyres Price Index:

Where:

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PiB: The price of good i in the Base period

PiF: The price of good i in the Final period

QiB: The quantity consumed of good i in the Base period

QiF: The quantity consumed of good i in the Final period

The Laspeyres PI weighs prices (both Base period prices and Final period prices) with base
period quantities. Consider an economy with N goods and services. The numerator in the
Laspeyres price index calculates nominal expenditure required to consume base period
quantity at final period prices. The denominator calculates nominal GDP in the base period.

1.3.3 Cost-Capacity Factor

A capacity factored estimate is one in which the cost of a new facility is derived from the
cost of a similar facility of a known (but usually different) capacity. It relies on the nonlinear
relationship between capacity and cost. When the cost to capacity factor is greater than 1,
diseconomies of scale are indicated for construction costs such that a doubling in capacity
results in a greater than a doubling in cost. With a cost to capacity factor equal to 1, the
relationship between facility cost and facility capacity is linear.

1.4 Quantity Take-Off and Measurement

Quantity take-offs (QTO) are a detailed measurement of materials and labor needed to

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complete a construction project. They are developed by an estimator during the pre-
construction phase. This process includes breaking the project down into smaller and more
manageable units that are easier to measure or estimate.

1.4.1 Measurement, Masonry, Glass Curtain Wall

Measurement is the quantification of attributes of an object or event, which can be used

to compare with other objects or events. ... The science of measurement is pursued in the field
of metrology. Measurement is defined as the process of comparison of an unknown quantity
with a known or standard quantity.

Masonry, the art and craft of building and fabricating in stone, clay, brick, or concrete
block. Construction of poured concrete, reinforced or unreinforced, is often also considered
masonry. An example of masonry is the work done to put the bricks on a brick house. That
which is built by a mason; anything constructed of the materials used by masons, such as
stone, brick, tiles, or the like. Masonry is used to indicate the art of building a structure in
either stones or bricks. The masonry wall is built of individual blocks of materials such as
stones, bricks, concrete, hollow blocks, cellular concrete and laterite, usually in horizontal
courses cemented together with some form of mortar

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Glass curtain walls are lightweight aluminum-framed facades housing glass or metal
panels. These glazing systems don't support the weight of a roof or floor. Instead, gravity
loads and wind resistance transfer from the surface to the building's floor line.

1.4.2 Facade _ Wall Finishes _ Measurement

Overview

 Façade

 Brickwork and stonework (masonry)

 Curtain walling.

 Precast concrete panels with various types of finishes.

 Insulated render.

 Metallic cladding.

 Tiles and stone veneer panels.

 Large boards consisting of an aesthetic and weather tight veneer.

 Glass and steel façade systems.

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Wall Finishes

 Cement plastered Finish.

 Cement Textured Finish.

 Plaster of Paris Finish.

 Gypsum Plaster Finish.

 Glass Mosaic Finish.

 Designer Mirror Finish.

 Laminate Finish

Measurement Overview

Measurement is the transformation of drawn information into descriptions and quantities,

undertaken to value, cost, and price construction work, as well as enabling effective
management. It is not just about a quantity surveyor producing a bill of quantities for
contractors to price during tendering. When measuring quality, there is the Construction
Quality Rate that measures quality during construction, and there is a Claim/Latent Defect
Rate that measures the long-term impact of quality, typically after the construction is
complete.

1.5 Cut and Fill

In earthmoving, cut and fill is the process of constructing a railway, road or canal
whereby the amount of material from cuts roughly matches the amount of fill needed to make
nearby embankments, so minimizing the amount of
construction labor. The process of cutting and removing
earth from its original position, transporting and
dumping the same as a fill or in the form of a spoil bank
is known as an earthwork in cutting or excavation.
When the formation level of a road is to be kept lower

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than the natural ground level, the road is run in cutting.

1.5.1 Cut and Fill Process and Equipment

Cut slopes are rarely created greater than a slope of two to one (horizontal to vertical
dimensions). Cut sections of roadway or rail are characterized by the roadway being lower in
elevation than the surrounding terrain. From an operational standpoint there are unique
environmental effects associated with cut sections of roadway. For example, air pollutants
can concentrate in the ‘‘valleys’ ‘created by the cut section. Conversely, noise pollution is
mitigated by cut sections since an effective blockage of line of sight sound propagation is
created by the depressed roadway design. There are at least two types of cut, side hill cut and
through cut. The former permits passage of a transportation route alongside of, or around a
hill, where the slope is transverse to the roadway or the railway. A side hill cut can be formed
by means of side casting, i.e., cutting on the high side balanced by moving the material to
build up the low side to achieve a flat surface for the route. In contrast, through cuts, where
the adjacent grade is higher on both sides of the route, require removal of material from the
area since it cannot be dumped alongside the route. A ledge is a cut in the side of a cliff well
above the bottom of a gorge.

1.5.2 Cut and Fill Takeoff

Unit of Measurement: Cubic Yards

Calculation: The net calculation is the difference between the desired elevation and the
original elevation.

Conversion: ft³ to yd³

Tip: a geotechnical and topographical survey will need to be performed in order to

properly quantify.

1.5.3 Cut and Fill Software

Earthwork software is generally a subset of CAD software, in which case it often an add-
on to a more general CAD package such as AutoCAD. In that case, earthwork software is

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principally used to calculate cut and fill volumes which are then used for producing material
and time estimates. Most products offer additional functionality such as the ability to takeoff
terrain elevation from plans (using contour lines and spot heights); produce shaded cut and
fill maps; produce cross sections and visualize terrain in 3D. The means by which volumes
are calculated in software can differ quite considerably leading to potentially different results
with the same input data. Many software products use methods based on triangulated
irregular networks (TINS) and triangular prism volume algorithms, however other calculation
methods are in use based on rationalizing elevations into high density grids or cross-sections.

 12D

 Cut+Fill

 n4ce

 AEC Cutfill

 Civil 3D

 Earthworks OnScreen

1.6 Introduction to Deep Foundations

A deep foundation is a type of foundation which is placed at a greater depth below the
ground surface and transfers structure loads to the earth at depth. The construction process of
a deep foundation is more complex and more expensive than shallow foundations.

1.7 Concrete Foundation

Foundation types vary, but likely your house or home's addition does or will have one of
these three foundations: full or daylight basement, crawlspace, or concrete slab-on-grade.

A slab foundation is made of concrete that is typically 4"–6" thick in the center. The concrete
slab is often placed on a layer of sand for drainage or to act as a cushion. Houses built on a
slab lack crawlspaces, and there is no space under the floor.

1.7.1 Concrete Foundation and Concrete Properties

• Concrete foundations on hard, uniform ground can be made without steel

reinforcement, if not in an earthquake or hurricane prone area.

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• All non-uniform and problem soils require reinforced concrete foundations, especially
in areas of medium to high rainfall and natural hazard regions.

• Depending on the strengths required, concrete mixes can vary from 1: 3: 4 (cement:
sand: gravel) to 1: 4: 7, the higher proportion of cement being required for reinforced
concrete.

• Water contents of fresh mixes should make them just easily workable. Excessive water
leaves pores in the concrete, making it weak and water absorbent. Foundation trenches should
also be properly wetted to avoid excessive absorption of the water from the mix.

• The concrete should be wet-cured for 3 to 7 days before building the walls. A damp-
proof course should be laid between foundation and wall.

Concrete Properties:

 Grades (M20, M25, M30 etc.)

 Compressive strength

 Characteristic Strength

 Tensile strength

 Durability

 Creep

 Shrinkage

 Unit weight

 Modular Ratio

 Poisson’s ratio

1.7.2 Concrete Formwork

Formwork is temporary or permanent molds into which concrete or similar materials

are poured. In the context of concrete construction, the falsework supports the shuttering

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molds. In addition to timber, concrete formwork can be made out of steel, plywood, and
fiberglass. These materials can be used separately or together. The most common type of
concrete formwork used in heavy civil construction is steel. In addition to being classified by
material, formwork can also be classified according to the building elements supported:

 Wall formwork.

 Beam formwork.

 Foundation formwork.

 Column formwork

1.7.3 Concrete Takeoff：Parking Lot Example

Slab =

75'*30'= 3,750Ft²

8/12= 0.67

3,750*0.67= 7500 Ft²

2500Ft²/27= 92.59 CY

Rebar =

50'*12'= 600 inches

600/16 = 37.5 Rebar

37.5* 75 = 2812.5 Ft

2812.5* 1043= 2933.44 lbs.

Formwork =

(0.67*50)2= 67.5 SF

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(0.67*75)2= 100.5 SF

Total= 168 SF

1.7.4 Concrete Takeoff：Skyscraper Example

Footings = 2*2*1= 4 Ft³

Total Footings= 4*25= 100 Ft³

Foundation Wall = 200+200+400+400= 1200'

= 2'*0.67*1200= 1608Ft³ Foundation Wall

= (100+1608)/27= 63.26 CY

Total No. 4 Rebar Per Footing= 100 Total No 4 Rebar

2*100 Total No 4 Rebar =200 Linear Feet No 4 rebar

200*0.68 Lbs. = 133.6 Lbs. of no4 Rebar

1200 Linear Feet of Foundation Wall=1200*12 = 14400 inches

14400/48" OC Placement= 300 total No.6 Rebar

300 Rebar * 2 Linear Height= 600 Total Linear Feet of No 6 Rebar

600 total Linear Feet of No 6 rebar *1.503 Lbs. /Foot= 901.2 Lbs. of No6 Rebar
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Therefore,

Footings= (2'L*1'H)*25=50 Sft

Foundation Wall:

(200'L*2'H)*2= 800 Sft

(400'L*2'H)*2=1600 Sft

Total of 2400 Sft of Formwork.

1.7.5 Quantifying rebar Walkthrough

Bulk Concrete 62.26 CY

No4 Rebar

4*25=100 no4 Rebar

100*2= 200 LF

0.668*200= 1336 Lbs. No 4 Rebar

No 6 Rebar

1200*12= 14400Inches

14400"/48°Celsius= 300 no 6 Rebar

= 300*2= 600 LF No6 Rebar

1.502*600=901.2 Lbs. No 6 Rebar

Formwork

(2*1)*25= 50 Sf

(200'L*2'H)*2= 800 SF

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(400'L*2'H)*2= 1600 Sf

Total = 2400 Sf of Formwork

1.8 Structural Steel

Structural steel is a carbon steel, meaning it has a carbon content of up to 2.1 percent by
weight. Although both medium and high-carbon steels (steels with a carbon content ranging
from 0.31 percent to 1.50 percent) can also be considered structural steel, these are typically
used for mechanical engineering purposes.

1.8.1 History of Structural Steel

The father of modern steelmaking was a Briton named Henry Bessemer, who in 1856
announced a description of the process, which bears his name, which would eventually
produce steel more cheaply and more importantly in larger quantities. Bessemer's invention
reduced the price of steel from 70 pounds to 10 pounds per ton though iron has been around
for centuries, its usage in construction is more modern than you might think. It began around
the Industrial Revolution, which was characterized by mass production and the development
of new materials, modern steel included. One of the first major uses of steel for construction
purposes was in train stations.

1.8.2 Steel Sections in Design

Steel sections are the bread and butter of steel fabrication. Designers, architects and
engineers choose different sections for their aesthetics and structural qualities – their choices

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determined by size, weight and profile. Steel is extremely versatile and can be molded to
many different shapes.

1.8.3 Structural Steel Takeoff Example

Firstly,

We need to calculate total weight of Steel Beams W27 x 114

10 x 155'= 1500 Linear Feet

1550 x 114=176700 Lbs.

Next, calculation of Joists 16K2

10 x135' = 1350 LF

Firstly we need to calculate total weight of Steel Beams W27 x 114

10 x 155'= 1500 Linear Feet

1550 x 114=176700 Lbs.

Next, calculation of Joists 16K2

10 x135' = 1350 LF

Total Weight based on Joist Linear footage

1350 x 5.5 = 7425 Lbs.

All Structural Steel Connections

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176700 Lbs. x 1.10= 194,370 Lbs.

7425 Lbs. x 1.10 = 81667.5 Lbs.

W27 x 114

194370 Lbs. / 2000= 97.19 Ton

16K2

8167.5 Lbs. / 2000= 4.08 Ton

Therefore, The whole area to capture the steel decking

135' x 155'= 20925 SF

2 Pricing

2.1 Pricing

Pricing in construction is the mechanism of formation of services and materials cost in

the construction market. Pricing policy in construction is based on the principles which are
general for all sectors. It is believed that most pricing used in construction is cost-based. The
typical procedure in cost-based pricing involves estimating the project cost, then applying a
markup for profit, traditionally subjectively. The most common way to estimate costs is to
make a list of items you need and add up their costs. Make sure you include all applicable
costs, such as equipment and parts, materials and supplies, labor, financing, fees and
licensing, transportation, and acquisition costs for land or facilities.

2.1.1 Pricing

(1) Cost of Materials and Formwork

Stripping back to material components

 Accurate

 Reliable

 Market Conditions

 Location factors

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 Project Specific

 Ways to Estimate Pricing

1. All in Rate

 Rates Database within the company

 Rates database online

 previous projects

2. Includes all material, Labor, equipment & other Costs.

First Principles

Accurate knowledge of direct costs (Material, labor, equipment)

Breaking the costs down to measure & price

Costs of Materials

 Purchase

 Delivery

 Storage

 Insurance

 Taxes

 Labor

 Waste

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 Pre and post- installation treatment

Concrete Material Example

 Formwork

 Reinforcing Steel

 Concrete mixing & Placing

(2) Concrete Material Reinforcing Steel and Concrete

Reinforced concrete, concrete in which steel is embedded in such a manner that the two
materials act together in resisting forces. The reinforcing steel—rods, bars, or mesh—absorbs
the tensile, shear, and sometimes the compressive stresses in a concrete structure. Plain
concrete does not easily withstand tensile and shear stresses caused by wind, earthquakes,
vibrations, and other forces and is therefore unsuitable in most structural applications. In
reinforced concrete, the tensile strength of steel and the compressive strength of concrete
work together to allow the member to sustain these stresses over considerable spans. The
invention of reinforced concrete in the 19th century revolutionized the construction industry,
and concrete became one of the world’s most common building materials. The reinforcing
steel—rods, bars, or mesh—absorbs the tensile, shear, and sometimes the compressive
stresses in a concrete structure.

2.1.2 Labor Costs

The cost of labor is the sum of all wages paid to employees, as well as the cost of
employee benefits and payroll taxes paid by an employer. The cost of labor is broken into
direct and indirect (overhead) costs. Direct costs include wages for the employees that
produce a product, including workers on an assembly line, while indirect costs are associated
with support labor, such as employees who maintain factory equipment. When a

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manufacturer sets the sales price of a product, the firm takes into account the costs of labor,
material, and overhead. The sales price must include the total costs incurred; if any costs are
left out of the sales price calculation, the amount of profit is lower than expected. If demand
for a product declines, or if competition forces the business to cut prices, the company must
reduce the cost of labor to remain profitable. To do so, a business can reduce the number of
employees, cut back on production, require higher levels of productivity, or reduce other
factors in production cost. Labor costs are also classified as fixed costs or variable costs. For
example, the cost of labor to run the machinery is a variable cost, which varies with the firm's
level of production. A firm can easily increase or decrease variable labor cost by increasing or
decreasing production.

(1) Money Component

Estimating money Component is difficult job.

Reasons:

 Scope and variety of the work

 The Craft Structure of labor union

 The Regional and local autonomy of Labor

 Thousands of different wage rates, fringe benefits, insurance rates etc.

To Estimate Labor Cost we must determine

 the applicable location and labor agreements

 the type of craft to perform the desired work

 the appropriate classifications within the craft

 the wage rates applicable at the time of the work is to be done

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Fringe benefits:

 Vacation

 pensions

 dental plans

 apprenticeship training

 industry advancement

Taxes based on payroll:

 Federal Income Tax

 State income Tax

 Local Taxes

(2) Productivity Component and Examples

Productivity, in economics, measures output per unit of input, such as labor, capital, or
any other resource. It is often calculated for the economy as a ratio of gross domestic product
(GDP) to hours worked.

Regional variations

 Training, Experience and skill of the local labor force

 work rules, which are negotiated between employers and unions

 Environmental Effects

 Weather, terrain, topography & other natural phenomena

 Physical locations and working conditions of individual craftsmen

Factors affecting humans as workers

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 Physical fatigue- Overuse of energy

 Mental Fatigue_ inability to maintain high level concentration for extended period
of time

 Boredom- Inability to maintain continuous attention

Labor Cost estimate

Work Hours= Quantity takeoff* Productivity rate

Total Labor Cost= Work hours* average wage rate

Example:

8'*8'*12' CMU; 0.11 Work Hour/SF; QTO= 1000SF; Crew= 3 Masons and 2 Helpers

What is the average wage rate per labor?

What are their working hours?

What is the total labor cost (average)?

Solution:

Total Work hours= 1000*0.11= 110 WH

Mason Work Hours= .60*110= 66 Mason WH

Helper Work Hours= .40*110=44 helper WH

If we take Hourly wage to 13.25$ for Masons and 10.00$ for Helpers

Average wage Rate per Labor will be 11.95$

Total labor Cost (avg.) = 110*11.95=$1314.50

2.1.3 Equipment Costs

Equipment Cost means, for any Item of Equipment, the gross amount paid by the
Company to the manufacturer thereof, including all applicable sales taxes, and delivery

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charges as invoiced by such manufacturer to the Company. The total cost of a piece of
construction equipment consists of two components namely ownership cost and operating
cost. This is also referred as O&O cost of the construction equipment. The selection of a
piece of equipment in a construction project depends on the total cost associated with that
equipment. Owning costs = purchase price of machine + financing + taxes – disposal price
(what you get for that machine when you resell it). Operating costs = labor + fuel +
maintenance + replacement costs of tires, tracks and other components + overhead.

2.2 Building the Estimate

2.2.1 Estimate Classification, Methods and Formats

The Cost Estimate Classification System maps the phases and stages of project cost
estimating together with a generic project scope definition maturity and quality matrix, which
can be applied across a wide variety of industries and scope content. Methods of Cost
Estimation in Projects. 1) Expert Judgment Method. 2) Analogous Estimating Method. 3)
Parametric Estimating Method

2.2.2 Design Estimate project

A design or development estimation is an important thing on the stage of making an

agreement with the client, and it is important for both the client and the company. For the
client, it gives an understanding of the budget and the approximate date of release.

 Get a Precise and Detailed Scope of the Project

 Use Stick Estimating to Gauge Costs

 Become Familiar With Calculating Costs by Hand

 Use Unit Cost Estimating for Speed

 Incorporate Estimating Software Appropriately

 Calculate Costs for Labor and Materials

 Set a Markup to Yield Profits

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 Be Detailed in Your Labor Costs

 Weigh Best and Worst-case Scenarios

 Be Clear About Preliminary and Finalized Estimates

2.2.3 Schematic Design Estimate Demo

Schematic design is a rough construction drawing that offers a general overview of a

project's basic features and construction cost estimates, allowing you to determine if your
concept fits within the project budget. Because we've already discussed conceptual budgets,
we'll move right into schematics. Schematic budgets signal the start of work by the architect,
allowing him to illustrate the design concept, including the site plan, floor plans, exterior
elevations, and key building sections.

2.2.4 Schematic Design：A Deeper Dive

As your design team starts to learn more about you, they'll guide you through an
exploration of forms and site relationships. You may have young children and would like a
compact house with an open central space connecting all rooms, or this may be your forever
home accessibility to your entire home across a single level. Your design team will produce a
series of initial floor plans responding to what you have shared with us exploring the
relationships between room types, landscape features, and solar orientation. You may have a
large dining room table that has hosted your family throughout the holidays or you may have
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unique artwork with specific lighting and mounting needs. When we arrive at a building form
and orientation that resonates with you, we’ll pause and analyze the design to develop a more
detailed budget. This budget will consider if there are larger glass openings that require
deeper beams or steel, if the exterior is more articulated or compact, and the surrounding
patios or water features. As your floor plan evolves to a more concrete design, the exciting
work begins. We’ll help you begin to navigate the world of materials, finishes, and fixtures as
well as which decisions need to be made sooner and affect other systems. Our dedicated
Selections Coordinator will provide structure to the many decisions that will be made during
the custom house design process. You may have a preferred appliance brand and are unsure
of what cabinetry lines it is compatible with or you may be interested in exploring flooring
option for durability in high traffic areas and for four legged friends. As decisions are made
we'll continue to refine the budget and provide early feedback to inform further decisions. At
this point we also begin to identify materials or manufacturing processes with long lead times
that require early scheduling considerations.

2.2.5 Building and Finalizing the Estimate

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. Detailed
Specification – Detailed specification describes every item of work in the estimate. Now
we're ready to finalize the budget and submit it for approval. We've established estimates and
double-checked our work. Before we submit the final budget for approval, though, there a
couple of more things we should do to make sure the budget is accurate. P.S.: Taking the time
to triple-check your estimates is not a bad idea. It’s very difficult to go back to the well and
ask for more money once the budget is submitted and approved. You're usually stuck with the
budget that was approved, so you want to be certain that you've included everything and that
the estimates are accurate. One method for calculating reserves is to add an additional
percentage of the total budget back into the budget for contingency. This percentage is going
to vary depending on the project. The risk identification and planning process can help you
zero in on a reasonable contingency number, and the risk response plans will help justify your
need for a contingency reserve. Or you could research historical project documents to see
how much reserve was used on projects in the past and then adjust it as necessary for your
project. Be careful with contingency reserves, though, as they can backfire. If you
consistently add too much into the budget, stakeholders will always be leery of your

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estimates. If you don't add enough, you're going to be stuck figuring out how to solve
problems within the budget you have because you aren't likely to get more. Make certain that
the contingency amount you're using is reasonable and accurate. Document how you came up
with the reserve amount and be certain to control the use of these reserves. Again, ask the
experts to take a look at your reserve estimate and see if it sounds reasonable based on their
past experience with similar projects.

2.2.6 Checks and Due Diligence

A due diligence check is a thorough investigation to identify, evaluate and verify all
available information on an individual or entity. Such checks are especially important when
you're hiring or considering a prospective business partnership or new commercial
relationship. Before starting any project in which, you need a contractor, start with a plan!
Below is a list of what I think should be your focal points in choosing the right contractor and
do make note that price is not one of them.

 Reputation & Review of work

 References & Communication

 Licensing

 Insurance

 Contracts

 Permits

 Change Orders

 Understand the Process

2.3 General Procurement Bid Stage

2.3.1 General Procurement_ Pre-Bid Estimate and Bid Documentation

Procurement is the action for getting or acquiring. It includes

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 Selecting vendors

 Strategic vetting selection

 Establishing Payment Terms

 Contact negotiation

 Purchasing of goods

Prebid Stage

 Determine Funding

 update estimate to current Design

 understand Current Values

 bring team to the procurement stage

Bid Documents

Basic aspects are down below

 Proper organization is paramount

 Ensure drawing pack register is accurate

 analyze all special details & contract requirements

2.3.2 Bid Stage, Bid Returns and Levelling

Bid Return

 The Process of receiving bids from pre-qualified candidates

 Dedicate enough time 2-4 weeks

 Analyze against the baseline

 Setup face to face interviews

 Levelling

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 Level the bid returns

 Conduct face to face interviews

 Maintain professionalism

2.4 Post Contract and Cost Estimation within a Project

2.4.1 Cost Reporting Overview

One of the most important cost control action is

submitting regular up-to-date and accurate cost
reports to keep the client well informed of the
current cost situation.

2.4.2 Cost Reporting Examples

Example

 Cumulative project cost plotted against time

 used as a desired forecast for cash flow

 historical record

 for performance checking

 allows the user to quickly identify growth, slippage and potential problems

2.4.3 Change Orders and Communication

Change orders

Changes to construction contract that occur after award

of the contract, while being within the general scope of
contract

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Types of Order

 Owner-initiated change order

 Contractor-initiated change order

Types by Items

 Lump-sum change order

 unit price change order

 Time and Material change order

Communication

 attendance at site meetings

 advising on contractual implications

 negotiations

 Clear, accurate user friendly cost reporting

3 Construction Cost Control Methods

3.1 Construction Cost Control Methods

3.1.1 What is Cost Control?

Cost control is the practice of identifying and reducing business expenses to increase
profits, and it starts with the budgeting process. As an example, a company can obtain bids
from different vendors that provide the same product or service, which can lower costs.

3.1.2 Defining Methods of Cost Control

 Influencing the factors that create changes to the cost baseline

 Ensuring requested changes are agreed upon

 Managing the actual changes when and as they occur

 Assuring that potential cost overruns do not exceed the authorized funding

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periodically and in total for the project

 Monitoring cost performance to detect and understand variances from the cost
baseline

 Recording all appropriate changes accurately against the cost baseline

 Preventing incorrect, inappropriate, or unapproved changes from being included in

the reported cost or resource usage

 Informing appropriate stakeholders of approved changes

 Acting to bring expected cost overruns within acceptable limits

3.2 Earned Value Method (EVM)

3.2.1 Defining EVM

Earned value management (EVM) is a project management methodology that integrates

schedule, costs, and scope to measure project performance. Based on planned and actual
values, EVM predicts the future and enables project managers to adjust accordingly.

3.2.2 EVM Parameters

EVM is built on three metrics: Planned value, earned value, and actual cost.

Planned Value = Planned Revenue

Planned value (PV) provides the baseline for tracking project performance in EVM,
representing the value a project is expected to deliver over its duration. In the context of
consulting projects, PV represents the revenue a project is expected to earn through
completion, adding up to the overall project fee or budget. In other words, planned value is
planned revenue.

Earned Value = Earned Revenue

The second metric of EVM is earned value (EV). For design consultancies, this is more aptly

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termed earned revenue; it represents the revenue a project earns as work is performed and
milestones are achieved.

Actual Cost = Actual Effort

The final core EVM metric, actual cost (AC), is the

market (or retail) value of cost a project incurs as work
is performed. This metric provides consultancies with a
way to compare how much effort has been expended on
a project in relation to the planned revenue and earned
revenue on the project. As such, in a professional
services context, this metric is better termed actual
effort.

3.2.3 Performance Examples

BCAC: Budgeted Cost at completion

BCWS: Budgeted Cost of Work Scheduled

ACWP: Actual cost of Work Performed

BCWP: Budgeted Cost of Work Performed

-BCWP= (%Complete) x BBCAC

3.2.4 EVM Favorable Performance

A positive variance and an index of 1.0 is favorite performance

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CV= BCWP- ACWP||CPI=BCWP/ACWP

SV= BCWP-BCWS|| SPI= BCWP/BCWS

Percentage Complete as of the Study Date

Earned Value for a given work package

BCWP= PC x BCAC

3.2.5 Calculating EVM

Earned value can be computed this way: Earned Value = Percent complete (actual) x Task
Budget. For example, if the actual percent complete is 50% and the task budget is $10,000
then the earned value of the project is $5,000, 50% of the budget provided for this project. If
we take the situation A

3.3 Close out Period

3.3.1 Close out Punch List Review

Since no building project will ever be perfect, contractors may make a distinction between
reasonable flaws (minor, insignificant flaws that still meet contract specifications) and
unreasonable flaws (errors that must be fixed). A punch list identifies unreasonable flaws for
correction

3.3.2 Close out Activities

A Contract Closeout occurs when a contract has met all the terms of a contract and all
administrative actions have been completed, all disputes settled, and final payment has been

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made. This includes those administrative actions that are contractually required; i.e. property,
security, patents, and royalties. Verify acceptance of final project deliverables.

 Conduct post-project assessment and lessons learned.

 Conduct post-project review and evaluation.

 Recognize and celebrate outstanding project work.

 Disburse project resources – staff, facilities and automated systems.

3.4 Cost Estimation in Practice

3.4.1 Cost Estimating in General Practice

Tips in Cost estimating/ Cost management

1. Design Management:

 Drawing Register

 Drawing Pack

 Engineering Pack

 Basis of Design

2. Estimate Class

 Understand the estimate lass

 Base it on the level of Design

 Ensure the classes, contingency & accuracy

3. Accurate measurement/ Takeoff

 Allow enough time

 Use Clear accurate descriptions

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 Use another pair of eyes to review work

4 cash

4.1 Cash Flow and Contracts

4.1.1 Cash Flow Method

Cash flow is calculated using the direct (drawing on income statement data using cash
receipts and disbursements from operating activities) or the indirect method (starts with net
income, converting it to operating cash flow)

 Cash Flows From Operations (CFO)

 Cash Flows From Investing (CFI)

 Cash Flows From Financing (CFF)

 Debt Service Coverage Ratio (DSCR)

 Free Cash Flow (FCF)

 Unlevered Free Cash Flow (UFCF)

4.1.2 Accrual Method

Accrual accounting is an accounting method where revenue or expenses are recorded when
a transaction occurs versus when payment is received or made. The method follows the
matching principle, which says that revenues and expenses should be recognized in the same
period.

4.1.3 Contractor Cash Flow

Contracted Cash Flow means Cash Flow that will be due to be received, on a fixed basis
and for a fixed price attributable to firm Contractual Obligations (i.e., take-or-pay or
substantially similar provisions), by the Borrower under the Off take Agreements and REC
Agreements

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4.1.4 Charting Cash Flow

A cash flow chart clarifies what your company does with its money in a way that may not
be apparent when you look at a spreadsheet page full of numbers. This understanding can
help you to make better-informed strategic decisions as well as streamline your internal
operations.

4.1.5 Calculating Billing

The three main billing options in the construction industry include:

 Advanced billing: Billing before the project begins.

 Arrears billing: Billing at the end of the project.

 Progress billing: Billing as the project progresses.

The billing method of any construction contract is a pivotal detail for both parties. Each
method carries different risks and advantages for either side and should be consciously
considered in negotiations. Project duration and stakeholders should also be considered in
every contract when selecting a billing method. More on this below.

4.1.6 Payment Cycle

In construction, a payment schedule is a timeline of the payments to be made throughout

the lifetime of a project. On most jobs, contractors don't receive a single, lump-sum payment
for the work or materials they provide. The Contract allows for payment in stages or interim
payments and sets out methods of calculating the sums due. If a payment schedule is not
agreed interim monthly payments is the default position. The Contract requires that the
Contractor (known as the payee) must make a payment application.

4.1.7 Payment Cycle Drivers

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Operational Payment Cycle Drivers

 Billing Review

 Accounting Process

 Finance review

Strategic Payment Cycle Drivers

 Contractor costs

 Leverage

1. Trade Contractor

2. General contractor

3. Client

4.1.8 Payment Cycle Delays

Delayed payment period refers to the actual days between the payment date and payment
due date when the User chooses to postpone the payment. The Service Provider will conduct
the comprehensive assessment based on the User’s credit status, but such maximum period
may not exceed 30 days. A delay in payment can occur for many reasons. It can be as simple
as someone being on vacation when their approval is required to sign off on the invoice.
More complicated reasons include a change in direction for the overall plan

4.2 Improving Cash Flow

4.2.1 Schedule of Value

A Schedule of Values, or SOV, is a list of every work item on a project, along with each
item's value or cost. This comprehensive work list represents the entire construction project
and the entire contract price, from beginning to end

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4.2.2 Accelerating Revenue

Revenue acceleration is the process of coexistence between marketing, sales, and customer
service in order to achieve a shared goal of driving revenue. Alignment through consistent
communication, optimized tools, and a concise vision is essential to a successful revenue
acceleration implementation

4.2.3 Front Loading

Front loading is an attempt by contractors to offset any negative impacts on cash flow. This
could be due to aggressive retinae practices, compensating for initial material and
mobilization costs, or minimizing the risk of a slow-paying customer. The construction
industry is credit-heavy.

4.2.4 Delaying Expenses

Delay and disruption costs are the additional costs that may have been incurred by
contractors as a result of a delay caused by the principal (person hiring the contractor). Along
with a schedule, most construction contracts will include a financial punishment for failing to
complete your work on time. This penalization is known as delay damage. Usually, delay
damages show up as a per-day charge for each day you are late completing your work.

4.3 Technology Trends in Cost Estimating and Cost Control

4.3.1 5D Estimating Systems (BIM)

5D BIM connects the “cost” factor to a 3D model, making the cost estimation process
consistent, automated and precise. The unique capability of 5D BIM to provide automated
quantity take offs and accurate costs at the initial stages of construction in real-time, proves to
be a game changer for cost managers.

4.3.2 Estimating Software in Action

The following estimating products are available online or are Mac-compatible:

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 ProEst (cloud-based)

 STACK (cloud-based)

 Clear Estimates (cloud-based)

 simPro (cloud-based)

 ConEst (cloud-based)

 Buildertrend (cloud-based)

 Buildxact (cloud-based)

4.3.3 Workflows

A workflow is a system for managing repetitive processes and tasks which occur in a
particular order. They are the mechanism by which people and enterprises accomplish their
work, whether manufacturing a product, providing a service, processing information or any
other value-generating activity.

4.3.4 Implementation Perspective

Implementation is the carrying out, execution, or practice of a plan, a method, or any

design, idea, model, specification, standard or policy for doing something. As such,
implementation is the action that must follow any preliminary thinking in order for something
to actually happen.

5 Cost Control

5.1 Cost Control for Large Programs

Cost control is the practice of identifying and reducing business expenses to increase
profits, and it starts with the budgeting process.

5.1.1 Program Cost Control

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Program costs- notably for large capital programs- represent a significant commitment-
often several $B over multiple years. Because many capital programs are complex,
effectively understanding costs and how to control them can be difficult.

The risk associated with a lack of effective cost control is great- multiple unknowns make
it challenging to discreetly quantify.

Cost Overruns have serious ripple effect that can impact beyond just the $$$'s. economic,
social and political.

Effective cost control will optimize that all program objectives are achieved.

5.1.2 Defining the Cost of a Capital Program

Cost of capital is a company's calculation of the minimum return that would be necessary
in order to justify undertaking a capital budgeting project, such as building a new factory. The
term cost of capital is used by analysts and investors, but it is always an evaluation of
whether a projected decision can be justified by its cost. Investors may also use the term to
refer to an evaluation of an investment's potential return in relation to its cost and its risks.
Many companies use a combination of debt and equity to finance business expansion. For
such companies, the overall cost of capital is derived from the weighted average cost of all
capital sources. This is known as the weighted average cost of capital (WACC).

5.1.3 Useful Tools for Cost Control

Cost Control can be defined as a tool that is used by the management of an organization
in regulating and controlling the functioning of a manufacturing concern by limiting the costs
within a planned level and it involves a series of activities that begins with the preparation of
a budget, evaluation of the actual performance and ends with implementing the necessary
actions that are required in rectifying discrepancies if any.

This is a mechanism that helps the management in regulating the costs of a

manufacturing unit. This involves the determination of necessary standards, ascertainment of

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actual results for comparing the same with the expected data, analyzing variances

, and establishing a necessary action that must be taken.

5.2 Lean in Cost Control

5.2.1 Money and Estimate in Capital Project Delivery

Money is a commodity accepted by general consent as a medium of economic exchange. It

is the medium in which prices and values are expressed. It circulates from person to person
and country to country, facilitating trade, and it is the principal measure of wealth. The
importance of budgeting in project management, lies in the ability to prevent unnecessary
costs and to allocate the correct amount of the budget to each corresponding need. ... As the
mantra goes, “Time is Money”, and nothing is more harmful to the successful development of
a project than a badly configured budget

Cost estimate is a predictive Cost Model that determines the future market value of a
design intent using incomplete, ambiguous data

Predictive Cost Model requires few aspects such as

Design- selection of building systems

Procurement - maximize competition

Decision making -Good| Better| Best

Delivery- meet the budget for allowable Cost

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5.2.2 Benchmarking and Normalization Process

These are the three steps of Normalization Process, First step is Escalation.

5.2.3 Lean Design：Value

Value is the end-goal and therefore the establishment of value parameters at the outset of a
project are key to the achievement of improved productivity and client/user satisfaction.
Following this statement we are concerned with value-based management and the control of

Values through value management in the early stages of the project and through value
engineering to deliver value in production. A number of complementary views of value and
value generation exist within the literature, indeed, it is a difficult word to discuss and define
adequately. It is, however, important that some care is taken to explain what value is (usually
defined as most value for the resources invested).

5.2.4 Lean in Cost Control

Lean is an operations strategy to deliver increased productivity via flow efficiency. Lean is
a project delivery system that strips away unnecessary effort, time, and cost in capital project
delivery to deliver what the owner values.

 Create a Baseline. Establish a standard or baseline against which actual costs are to
be compared.

 Calculate a Variance. Calculate the variance between actual results and the standard
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or baseline noted in the first step.

 Investigate Variances.

 Take Action.

5.2.5 Lean Set Based Design

Building Systems

-Uniformat|Batch thinking

Segmentation

-Site Base| Building|Fit-out

Holistic Design

-Parallel Thinking

Last Responsible Moment

-Pull Planning+ CBA

6 summary

To eliminate cost overruns the following should be adhered to all time;

 The consultants should apply project management tools in their project delivery.

 The client, the consultants and the contractors should strictly work within the scope
originally planned for the project.

 Projects should be planned properly before execution starts

 Only contractors with adequate experience and financial ability to handle

construction projects should be awarded contracts.

 Communication gaps should not exist between the stake holders of the building
construction projects.

 A commitment should be made to cost control followed by clear actions. In most

construction budgets, there is an allowance for contingencies or unexpected costs

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occurring during construction. This contingency, is probably the best way to,
amount may be included within each cost item or be included in a single category
of construction contingency.

For example, one construction firm makes estimates of the expected cost in five different
areas:

 Design development changes,

 Schedule adjustments,

 General administration changes (such as wage rates),

 Differing site conditions for those expected, and

 Third party requirements imposed during construction, such as new permits.

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