SRE302 – Building

Measurement & Estimating

Week 5
An introduction to estimating

Delivered by:
Dr Argaw Gurmu
Level 4 - John Hay Building, Deakin University, Geelong
Tel: +613 522 78663
E-mail: argaw.gurmu@deakin.edu.au
 CLASS AND SEMINARS

 Class – Wednesdays from 11:00 - 11:50 in D2. 194

 Seminar 2 - Wednesdays from 12:00-12:50 in D3.202
 Seminar 3 - Wednesdays from 16:00-16:50 in D3.202
 TEACHING TEAM

Unit Chair , Lecturer & Tutor- Argaw Gurmu

 Email: argaw.gurmu@deakin.edu.au
 Tel: +61 3 522 78663

Contact via: Discussion Board on CloudDeakin; In person (by

appointment); E-mail; or Telephone.
 SUPPORT TEAM

 Study Support - http://www.deakin.edu.au/students/study-support

 Library - https://www.deakin.edu.au/library

 Student Central - http://www.deakin.edu.au/students/deakin-central

 Student Committee

 Deakin University Student Association (DUSA) - www.dusa.org.au

 LEARNING OUTCOMES

 ULO1: Integrate the principles and practices of measurement and

estimating
 ULO2: Develop comprehensive skills in the use of the Australian Standard
Method of Measurement (ASMM) as a tool for completing measurement
and estimating.
 ULO3: Measure quantities and estimate unit rates to prepare tenders for
common types of low and medium rise construction
 ULO4: Utilise information technology, especially Building Information
Modelling (BIM) for measurement and estimating.
GRADUATE LEARNING OUTCOMES

 GLO1: Discipline knowledge and capabilities

 GLO2: Communication
 GLO3: Digital literacy
 GLO4: Critical thinking
 GLO5: Problem solving
 GLO6: Self-management
 GLO7: Teamwork
 GLO8: Global citizenship
 UNIT WEEKLY ACTIVITIES

Week Commencing Topic Assessments

1 6 March 2022
Introduction, Preliminaries, Preambles & CostX
2 13 March Measurement of Reinforcement
3 20 March Assignment 1 – Quiz 1 (open)
Review of Concrete and Formwork Measurement

4 27 March Measurement of Structural Steelwork

5 3 April Assignment 2 - Interim
Introduction to estimating
Report Due
6 17 April Estimating Part I
7 24 April Assignment 1 – Quiz 2 (open)
Estimating Part II

8 1 May Estimating Part III

9 8 May Assignment 2 – Final report
Measurement of Finishes
Due
10 15 May Measurement of Drainage
11 22 May Revision Assignment 3- Due
 ASSESSMENTS

Mark
Deliverable Format Submission Date
(%)
Assessment 1 – Quiz 1 10 Individual 24 March 2023 8pm to 31 March 2023 8pm
Assessment 1 – Quiz 2 10 Individual 28 April 2023 8pm to 5 May 2023 8pm
Assessment 2 – Interim Report 25 Group Thursday, 6 April 2023 by 8pm
Assessment 2 – Final Report 25 Group Friday, 12 May 2023 by 8pm

Assessment 3 – Individual Friday, 26 May 2023 by 8pm

Individual NB: Hurdle requirement applies,
Measurement & Estimating 30
students must achieve at least
Task 40% in Assessment 3 to pass the Unit
LATE SUBMISSIONS AND PENALTY

Please take note!

•If you do not have an approved extension to submission due date, then
5% will be deducted from the available marks for each day up to 5 days.
•If work is submitted more than five days after the due date, will not be
marked; and you will receive 0 marks for the task.
https://video.deakin.edu.au/media/t/1_kco3xroe
 PLAGIARISM AND COLLUSION

 Web link: http://www.deakin.edu.au/students/study-

support/referencing/plagiarism

 Reference correctly

 Work with your friends to learn – write your own assignment to

demonstrate that you have the required knowledge
Unit Site
UNIT GUIDE
ASSESSMENT BRIEF
 LEARNING RESOURCES

Australian Institute of Quantity Surveyors and New

Zealand Institute of Quantity Surveyors 2018,
Australian and New Zealand standard method of
measurement of building works (ANZSMM) , 1st
ed., Australian Institute of Quantity Surveyors, Sydney.

 YOU NEED TO BUY THIS BOOK.

 Please note that ANZSMM is only available on

"Reserve" in the Deakin Library
 LEARNING RESOURCES

Picken, D.H. 1999.

Marsden, P., 1999. Sierra, J.E.E. 1994. Building measurement:
Building measurement: Worked
Basic building A guide to the Australian standard method
examples. Geelong, Vic.:
measurement. 2nd Ed. of measurement of building works. 2nd Ed.
Deakin University Press.
Kensington, NSW: NSW: Open Training and Education
UNSW Press. Network.
 Outline

1. An introduction to estimating
2. Construction estimating and its importance
3. A review on cost estimation tools and techniques
4. Detailed estimating
4.1 Material pricing
4.2 Labour cost
1. An Introduction to Estimating
1. An Introduction to Estimating

What is tendering?
A bidding process to choose or find a contractor to
complete the project at hand. This is often referred to as
‘procurement’ these days:
1. An Introduction to
Estimating

Bidding Flowchart

Adopted from Popescu et al. 2002

1. An Introduction to
Estimating

Estimating

Bidding
Flowchart

Adopted from Popescu et al. 2002

1. An Introduction to Estimating

What is estimating?

Estimating is the process of developing an approximation of the

monetary resources needed to complete project activities
(PMBOK, 2013).

Bidding price=∑quantities of work * unit rates

1. An Introduction to Estimating

Definition of estimating (alternative definition)

Estimating is to determine in advance
expected costs of:
 Labour
 Material
 Equipment
 Overhead and profit
 Contingencies
which is needed to complete your project.
Labour
Equipment Material
2. Construction estimating and its
importance
• Appropriate cost estimation can assist to reduce the project
cost overrun

Table 1: Inaccuracy of transportation project cost estimates by

type of project

Type of project No. of cases Avg. cost overrun % Standard

deviation
Rail 58 44.7 38.4
Bridges and tunnels 33 33.8 62.4
Road 167 20.4 29.9

The dataset in Table 1 shows cost overrun in 258 projects in 20 nations in five continents.

Reference: Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it
Bent Flyvbjerg
2. Construction estimating and its
importance
Examples of Projects with cost overrun
1. Epping to Chatswood Rail line Project- Sydney

Reference: Delivering large scale capital projects – A baseline of performance in

Australia, Research study for Business Council of Australia
2. Construction estimating and its
importance
2. Sydney Opera House Project
The original cost and scheduling estimates in 1957 projected a cost of $7 million and
completion date of 26 January 1963 (Australia Day).
In reality, the project was completed in 1973 and with actual cost of $102 million.
Sydney Opera House was completed ten years late and more than fourteen times over
budget.

Construction progress in 1968

Reference: https://en.wikipedia.org/wiki/Sydney_Opera_House
2. Construction estimating and its
importance

Why estimating?
One of the main reasons for the projects cost
overrun, is an underestimation of the project costs!
2. Construction estimating and its
importance
Importance of cost estimating
An accurate cost estimate is necessary for:
1. Being successful in the bidding process
2. Maintaining a reasonable profit margin

The company may starve to death because

of the lack of work!!
Estimator

Estimates are too

Bidding… high
Estimates are too
low

The company may lose money and go

bankrupt
2. Construction estimating and its
importance
Key pillars for the success of estimating:

success of an
estimating

Understanding of Understanding of
construction process
Experience fundamental principles
of estimating
3. Review of cost estimation tools and
techniques
3. Review of cost estimation tools and
techniques
Cost Estimation Tools and techniques based on
PMBOK:
1. Bottom-up estimating (detailed estimating)
2. Analogous estimating
3. Parametric estimating
4. Three-point estimating
5. Reserve analysis
6. Quotations
3. Review of cost estimation tools and
techniques
The accuracy of project estimates as the project progresses

Detailed
Estimating

1. Expert judgment Time

2. Analogous estimating

3. Parametric
estimating

Reference: AACE® International Recommended Practice No. 56R‐08

COST ESTIMATE CLASSIFICATION SYSTEM –AS APPLIED FOR THE BUILDING AND GENERAL CONSTRUCTION INDUSTRIES
3. Review of cost estimation tools and
techniques
Detailed estimating (Bottom-Up estimating)

Detailed estimating technique is applied when the detailed project data

becomes available
Detailed estimating is a method of estimating a component of work.
The cost of individual activities is estimated to the greatest level of
specified detail.
The detailed cost is then summarized or “rolled up” to higher levels
for subsequent reporting and tracking purposes.
4. Detailed Estimating

Material Pricing
Labor Costs
Equipment costs Combining
Project cost
Subcontractor estimation
Profit and overhead
Contingencies
4.1 Material pricing

Material pricing:

4.1.1- Cost of the materials

4.1.2- Shipping costs
4.1.3- Sales tax
4.1.4- Storage costs
4.1.5- Escalation allowance
4.1.6- Waste
4.1 Material pricing

4.1.1- Cost of the materials

Material pricing can be obtained from:
A. - Quotations (from suppliers)
B.- In-house database
C.- Cost information services (National reference books):
 Rawlinsons Australian Construction Handbook
 Cordell’s Building Cost Guide
 Building Economist (quarterly publication by AIQS)
 4.1 Material pricing

4.1.1- Cost of the materials

A. Cost of materials obtained from suppliers

This is done by sending information on the Request for materials quote

quantity of materials needed to the supplier for Project:

pricing. Quantity Units Description Cost / Unit Cost

Kg/Meter
a /CUM/… b C=a*b

Subtotal
Delivery
Subtotal
Sales tax
Total
Cost=(Quantity)*(Cost per unit)
4.1 Material pricing

4.1.1- Cost of the materials

B.- Cost of material obtained from in-house database
In-house databases may be obtained by:
determining past costs from the accounting system
looking at previous materials invoices.

Cost per Unit = Cost / Quantity

4.1 Material pricing

4.1.1- Cost of the materials

B- Cost of material obtained from in-house database

Example 1.

A recent project included 150 square meter of 10 cm-thick sidewalk. The

cost of the concrete materials for the sidewalk was $2,430. Determine the
material cost for 1 square meter of sidewalk.

Solution:
The material cost per square meter is determined as follows:
Material Cost = $2,430/150=$16.2 /m2
 4.1 Material pricing

4.1.1- Cost of the materials

C.- Cost of materials obtained from national reference books

Example: Concrete-base prices (Rawlinson, page 235)

4.1 Material pricing

4.1.2- Shipping cost

Definition of the term “FOB”:
FOB (free on board) identifies the point where the supplier relinquishes
responsibility for shipping and protection of the materials against loss to
the purchaser of the materials.

Material prices are often quoted:

FOB the factory
FOB the supplier’s warehouse
FOB the jobsite
4.1 Material pricing

4.1.2- Shipping cost

FOB the factory
The purchaser is responsible for shipping from the factory to the site
If the unit is damaged during shipping, the purchaser would be responsible for the
cost of the damage

FOB the job site

The supplier is responsible for shipping the equipment to the site
If the unit is damaged during shipping, the supplier would be responsible for the
cost of the damage
 4.1 Material pricing

4.1.2- Shipping cost

Prices for shipping are obtained from the supplier or shipper:
Flat rate per delivery:
Ex. A lumber supplier charge $25 per delivery
By the hour:
Ex. An aggregate supplier may charge $65 per hour for delivery
By the Weight:
Ex. Long-distance shipping by truck is charged by weight
4.1 Material pricing

4.1.2- Shipping cost

Example 2:
The price for a 10.1 Ton pump has been quoted FOB the factory. You have
obtained a shipping price of $500/ton to ship the pump from the factory
to the jobsite. Determine the cost of shipping the pump.

Solution:
Shipping Cost = $500 * 10.1 =$5,050
 4.1 Material pricing

4.1.3- Sales Tax

The sales tax rate is expressed as a percentage of the sales price of the
taxable materials.

The sales tax rate can vary by project, city, county, and state. It is important
for the estimator to determine the local sales tax rate for each project.

Sales Tax=Taxable Materials * Sales Tax Rate

4.1 Material pricing
 4.1 Material pricing

4.1.4- Storage cost

When purchasing materials or equipment before they are needed, the contractor may
have to provide a place to store the materials and equipment until they are installed.
Types of storage:

On-site :
May include temporary fencing or containers in which to store the material or security
to protect from theft.

Off-site:
Secure storage space for the materials may need to be rented. Shipment cost to the site
as they are needed, adds to the cost of the materials.
4.1 Material pricing

4.1.5- Escalation
When the material prices are expected to increase over the duration of
project, the estimator needs to include an escalation allowance in the material
prices to cover the anticipated increases.

Escalated Cost = Cost(1+ f )

f =Expected Escalation or Inflation Rate
4.1 Material pricing

4.1.5- Escalation
Example 3:
You have been quoted $62,825 for an order of pipe. You expect pipe prices
to increase by 4.5% between now and the time you place the order. How
much should you include in your bid to cover the cost of the pipe?

Solution:
Escalated Cost = $62,825 * (1+ 0.045 ) = $65,652
4.2 Labour Cost

Basic principles for estimating labor cost:

𝑛𝑛

𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 = � 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 ℎ𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝑖𝑖 ∗ 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟(𝑖𝑖)

𝑖𝑖=1

Labor hours = Quantity of work * Labor productivity

Where,
“i” is the number of activity,
“labor hour” is number of labor hours required to complete the work and
“labor rate” is the hourly rate for an employee

“labor productivity” and “labor rate” are the inputs for calculating the labor cost
4.2 Labour Cost

Labour Productivity

Labor hours = Quantity of work * Labor productivity

 4.2 Labour Cost

Labour productivity
Labor productivity is a measure of how fast construction tasks can be
performed.

Productivity can be reported as:

1. The number of units performed during a labour-hour or crew-day
(often referred to as output)
2. The number of labour-hours required to complete one unit of work
 4.2 Labour Cost

Labour productivity
Example for 1st method:

Productivity for a seven-person concreting crew is 70 cubic meter (cum)

of concrete per 8-hour day.
OR

Productivity is [70 / (8*7)] = 1.25 cum of concrete per labor hour (lhr)
 4.2 Labour Cost

Labour productivity
Example for 2nd method:
Convert the output of 70 cum of concreting per 8-hour day for
a seven-person concreting crew to labour hours per cum.

Labour-hours per Unit = Labour Hours / Output =

(7person)*(8hr/person-day) / (70m3/day)= 0.8 lhr/m3

Productivity for concreting may be expressed as 0.80 labour-

hour per cum of concrete.
 4.2 Labour Cost

Factors affecting labor productivity

Skilfulness
Motivation
Weather condition
Efficiency of supervision
Overtime
Fatigue
Size of Crew
Lack of working area
Safety
 4.2 Labour Cost

Estimating of labor productivity

1. National reference books
2. Historical data
3. Field observations
 4.2 Labour Cost

Labor productivity
1- Estimating labor productivity using national
reference books
The least accurate source of data is that from national
reference books.
Labor productivity varies greatly around the country.
4.2 Labour Cost

1- Estimating labor
productivity using national
reference books
4.2 Labour Cost

1- Estimating labor
productivity using national
reference books
4.2 Labour Cost

1- Estimating labor
productivity using national
reference books
Questions?