ESTIMATING &

COSTING
Course coordinator:
Honoré TUYISHIME, M.Sc.(Eng)
INES-Ruhengeri
Civil Engineering Department
 Course details

 Course Title : Estimating and costing

 Program: BSc. (Civil Engineering), Year
3
 Code: CEN 4223
 Credits: 10
 Duration Period: 100 Hours
 Contact Hours: 65 Hours
 Course assessment

 Exam: 40 marks 
 Assessments + CAT : 60 marks 
 Total: 100 marks
 Pass mark: 50 marks
 Brief Description
 The course is designed to provide the basics
of estimating and costing of various
construction projects such as buildings,
roads, water supply systems, dams, airports
and other related civil engineering
structures.
 It covers determination of unit rates for
labour, construction materials, construction
plant & equipment and possible forecasting
of future construction rates.
 Brief Description (cont’d)
 It consist of determining the cost of various
items in the structure and calculate the overall
cost of the structure.
 Course Outline
 Part 1: Introduction 
 Part 2: Estimating process &
procedures
 Part 3: Measurement of materials
& works
 Part 4: Rate analysis & valuation
 References
 Chakraborti, M. (2011). Estimating and costing,
Specification and Valuation in Civil Engineering.
 Dutta, B.N. (2010). Estimating and costing in Civil
Engineering Theory and Practice.
 Rangwala, S.C. (2007). Elements of estimating
and Costing. Charotar Publishing House, Anand.
 Birdie, G.S. (2008). A text book on Estimating and
Costing. Dhanpat Rai and Sons, New Delhi.
 PART 1:
INTRODUCTION
 1.1. Estimating
 Estimating is the technique of calculating or
computing the various quantities and
expected expenditure to be incurred on a
particular work or project.
 Estimate is an approximate calculation of
quantity or degree or worth; ”an estimate of
what it would cost”; ”a rough idea how long it
would take.”
 1.1. Estimating (cont’d)
 A cost estimate is a compilation of many
elements, an approximation of the probable
quantity and unit cost of each of the
elements. It is not a single number. It has
uncertainty and risk associated with its
elements and it is used as a basis for making
financial decisions.
1.2. Updating cost estim–ates
Cost estimates are never static. They must be
reviewed continually to keep them current. The
project engineer is responsible for keeping the
project cost estimates updated, while the project
manager is responsible for reviewing and
approving all project cost estimates.
 1.3. Role of cost estim–ating
 It gives an idea of the cost of the work and
hence its feasibility can be determined;
 It gives an idea of time required for the
completion of the work;
 Programming;
 It is required to invite the tenders and the
quotations (prices) and to arrange contract;
 1.3. Role of cost estim–ating
(cont’d)
 It is required to control the expenditure during
the execution of work (basis for cash flow
requirements over time);
 It is used to avoid project cost overrun
and also avoid excessive cost underrun. Cost
underrun leads to shortage of funding to
deliver the project, while cost overrun leaves
unused funds that could have been used to
deliver other important projects;
 1.3. Role of cost estim–ating
(cont’d)
 It is used in making financial decisions (option
selection);
 It is a basis for projecting funds;
 Funding approval;
 etc
 1.4. Requirements for preparing
an estimate
 Drawings like plans, elevations, sections, etc
(drawings must be clear and with complete
dimensions);
 Detailed specifications about workmanship &
properties of materials (detailed description of
the various items of work laying down the
quantities and qualities of materials, their
proportions, the method of preparation,
workmanship and execution of the work);
 1.4. Requirements for
preparing an estimate (cont’d)
 Standard schedule of rates of the current year.
The cost estimator must research costs,
compare costs, and use professional judgment
to prepare a quality cost estimate.
 1.5. Types of estimate
1/ Detailed estimate (project design): the
preparation of detailed estimate consists of
working out quantities of various items of work
and then determine the cost of each item:
 Details of measurements and
calculation of quantities (details of
measurements form):
 
 1.5. Types of estimate (cont’d)

 Abstract of estimated cost ( abstract of

estimated form: S/N, description, quantity,
unity, rate, amount).

S/N Description of Quantity Unity Rate Amount

item
1.5. Types of estimate (cont’d)
N.B: Factors to be considered:
 Quantity and transportation of materials: for

bigger project, materials will be purchased and

transported at a cheaper rate.
 Location of site: the site of work is selected to

reduce damage during loading, unloading and

stocking of materials.
1.5. Types of estimate (cont’d)
 Local labor charges: the skills, suitability and
wages of local labors are considered while
preparing the detailed estimate.
1.5. Types of estimate (cont’d)
2/ Approximate estimate (Project planning): is
prepared from the practical knowledge and cost
of similar works. It is required for studies of
various aspects of work of project and for its
administrative approval. It can decide whether the
net income earned justifies the amount invested or
not.
1.5. Types of estimate (cont’d)
Methods:
 Plinth area method;

 Cubical contents methods;

 Unit base method.

 1.6. Complete estimate
A complete estimate must include:
 Cost of land (actual cost of land, cost of

surveying and cost of verification of deeds);

 Contingencies, petty supervision and

unforeseen items at 4%;

 Legal expenses between owner and contractor;
 1.6. Complete estimate (cont’d)
 Cost of structure (cost of materials, cost of
labour, permit fees for construction, water,
electricity from concerned authorities, cost for
preparation of plan, estimate and design, cost
of supervision,…).
 PART 2:
ESTIMATING PROCESS &
PROCEDURES
 2.1. Projects phases
1) Needs/ deficiencies
2) Planning
3) Programming/Preliminary design
4) Final design
5) Advertise & Bid
6) Construction
 2.2. Project life
Most projects are developed in four separate
phases:
 Project feasibility

 Investigation and reporting (I&R)-various

options:
 scoping,

 scheme assessment report (SAR)and/or

assessment of environmental effects (AEE),

 notice of requirement for designation (NOR)

and resource consents.

 2.2. Project life (cont’d)
 Design and project documentation (D&PD)
 Construction (management, surveillance and

quality assurance, physical works).

N.B. For the success of the project, reliable cost
estimates are required at each phase.
Each project phase has an estimate which is
updated progressively as the project develops.
 2.2. Project life (cont’d)
 Project feasibility – FE: Feasibility estimate is
based on limited knowledge of the project.
 Investigation & Reporting – OE(s): various
options with their corresponding estimates.
 The PE (Pre-Design Estimate): once the
designation is confirmed and all of the
conditions are fully understood.
 2.2. Project life (cont’d)
 Design & Project Documentation – DE:
once an option is approved it will progress
to detailed design. At the end of this phase, a
Design Estimate (DE) is produced and used to
secure construction phase funding.
 2.2. Project life (cont’d)
 Construction: during this phase the
design is tendered out to the market. After
receipt of tenders and before the contract is
awarded, the estimate will be revised to a
Construction Estimate (CE) which will be
used until the completion of the project.
 2.2. Project life (cont’d)
 Project life cycle with indicative uncertainty
curves:
2.3. Procedure of estim–ating
 Preparing detailed estimate (work
breakdown structure: work to be done, who is
going to do it and when is to be done);
 Calculate the rate of each unit work (cost
estimating);
 Preparing abstract of estimate (estimate
summary).
 2.4. Estimating as a pro–cess
 Estimating is a process. Information
must be assembled, evaluated, documented,
and managed in an organized manner. People
involved in preparing the estimate must know
their role, responsibility, and authority.
 The quality of an estimate is governed by
the following considerations:
 2.4. Estimating as a pro–cess
(cont’d)
 Quality and amount of information
available for preparing the estimate;
 Time allocated to prepare the estimate;
 Proficiency of the estimator and the estimating
team;
 Tools and techniques used in preparing the
estimate.
 2.4. Estimating as a pro–cess
(cont’d)
 The preparation of an estimate involves the
following:
 Development of construction methods;
 Preparation of the construction schedule;
 Material quantity takeoffs;
 Assessment of risks for contingency.
 2.4. Estimating as a pro–cess
(cont’d)
 For accuracy, an investigation of the
physical characteristics of the project site must
be conducted. Estimate documentation is
essential as it improves communication
between the estimating team and
management, establishes a mechanism for
estimate reviews, and forms a basis for
early project cost control.
 2.4. Estimating as a pro–cess
(cont’d)
 As the estimate is being prepared, it is
important to perform “reality checks” to
make sure the costs developed are within
reason.
 At the end of the project, a final project cost
report must be prepared and it is an
extremely valuable document to capture
lessons learned for improving future estimates.
 2.4. Estimating as a pro–cess
(cont’d)
 Consultants/ estimators need to assess the
future escalation risks for the project’s cash
flow and delivery timing. Escalation shall be
applied from the date of the estimate
preparation through to the expected
completion of the project.
 2.5. Tendering
 Tendering is the administrative
procedure of sending out drawing and bills of
quantities or specifications to contractors for
them to state their prices for all the items of
one contract. Besides the contractors price,
other considerations include his competence
and financial standing.
 2.5. Tendering (cont’d)
 Types of tendering:
 Open tendering: an advert is placed in the
press to invite any firm that wishes to do
so to submit a tender for a project, the
advert will give a brief description of the works
to be undertaken. Interested firms apply for
the tender document, collect them, upon
payment of money deposit which is usually
non-refundable,
 2.5. Tendering (cont’d)
this deposit covers the cost of documents and
discourages the non-serious bidders.
 Selective tendering: the procedure
consists of selecting a limited number of firms
and invite them to submit tenders. A short
list of between 5 - 8 competent contractors
is usually drawn up with one or two reserve
firms to replace any on the original list who
fails to accept the invitation to tender.
 2.5. Tendering (cont’d)
 Negotiation: the client has a satisfactory
association with a particular firm and is
prepared to give them thecontract on the
recommendation that they are competent
and their price is reasonable.
 Stages in tendering:
 2.5. Tendering (cont’d)
 Preparation of tender documents;
 Tender documents;
 Invitation to tender;
 Collection of tender documents;
 Preparation of bid documents;
 Submission of bid documents;
 Opening of bids.
 2.5. Tendering (cont’d)
 Factors affecting tender price:
 Action of tendering;
 Market condition;
 Availability of materials;
 Availability of labour;
 Transportation (farther the site id from town,
more expensive will be the construction cost);
 2.5. Tendering (cont’d)
 location (standard of living);
 Location of site (road access, water &
electricity, security measures, etc);
 Site condition (the nature of ground);
 Time consideration;
 Total height of building;
 Class of contractors (The larger the firm, the
higher their cost: permanents staffs, board of
directors, level of profit,…);
 2.5. Tendering (cont’d)
 Type of client (some clients have methods
to be taken into consideration while estimating
construction cost); 
 Type of consultants (some architect are very
difficult to work with, many variations, delays
are frequent);
 Types of tendering (open tendering generally
brings lower price).
 PART 3:
MEASUREMENT OF
MATERIALS & WORKS
 3.1. Units of measurements
 Single units work are expressed in numbers.
e.g. doors, windows, trusses, etc
 Linear measurements are expressed in

running meters (RM).

e.g. fencing, cornice, handrail, etc
 Surface measurements are expressed in

square meters (m2).

e.g. plastering, paints, etc
3.1. Units of measurements (cont’d)

 Cubical measurements are expressed in cubic

meters (m3)
e.g. earth works, masonry, concrete, etc
 3.2. Measurement rules
1) Measurement shall be made for finished
item of work and description of each item
shall include materials, transport, labour,
fabrication tools and plant and all types of
overheads for finishing the work in required
shape, size and specification.
2) In booking, the order shall be in sequence of
length, breath and height or thickness.
 3.2. Measurement rules (cont’d)

3) All works shall be measured subjected to

the following tolerances:
 Linear measurement shall be measured to the
nearest 0,01m.
 Areas shall be measured to the nearest 0,01
sq.m
 Cubic contents shall be worked-out to the
nearest 0,01 cum.
 3.2. Measurement rules (cont’d)

4) The bill of quantities shall fully describe

the materials, proportions, workmanships and
accurately represent the work to be executed.
5) In case of masonry (stone or brick) or
structural concrete, the categories shall be
measured separately and the heights shall be
described:
3.2. Measurement rules (cont’d)
 From foundation to plinth level
 From plinth level to first floor level
 From first floor to second floor level and so on
 3.3. Measurement met–hods
The quantity like earth work, foundation, concrete,
brickwork,…can be workout by any of following
methods: long wall-short wall method, center line
method, and partly center line and partly cross
wall method.
1) Long wall - short wall method: in this method,
the wall along the length of room is considered to
be long wall while the wall perpendicular to long
wall is said to be short wall.
 3.3. Measurement met–hods
(cont’d)
To get the length of long wall or short wall,
calculate first the center line lengths of individual
walls. Then the length of long wall, (out to out)
may be calculated after adding half breadth at
each end to its center line length. Thus the length
of short wall measured into in and may be found
by deducting half breadth from its center line
length at each end. The lengths are multiplied by
breadth and depth to get quantities.
 3.3. Measurement met–hods
(cont’d)
2) Center line method: this method is suitable for
walls of similar cross sections. The total center line
length is multiplied by breadth and depth of
respective item to get the total quantity at a time.
The estimates prepared by this method are most
accurate and quick.
 3.3. Measurement met–hods
(cont’d)
3) Partly center line and partly cross wall method:
the method is adopted when external wall is of
one thickness and the internal walls having
different thicknesses. In such cases, centerline
method is applied to external walls and long wall-
short wall method is used to internal walls. This
method suits for different thicknesses walls and
different level of foundations.
 3.3. Measurement met–hods
(cont’d)
There are 3 methods of preparation of
approximate estimate: plinth area method, cubical
content method, and unit base method.
1) Plinth area method: the cost of construction is
determined by multiplying plinth area with plinth
area rate. The area is obtained by multiplying
length and breadth (outer dimensions of building).
 3.3. Measurement met–hods
(cont’d)
In fixing the plinth area rate, careful observation
and necessary enquiries are made in respect of
quality and quantity aspect of materials and
labour, type of foundation, height of building, roof,
wood work, fixtures, number of storeys, etc
 3.3. Measurement met–hods
(cont’d)
2) Cubical content method: the method is
generally used for multistoreyed buildings. It is
more accurate . The cost of a structure is
calculated approximately as the total cubical
contents (volume of buildings) multiplied by local
cubic rate. The volume of the building is obtained
by length*breadth*depth or height. The length
and breadth are measured out to out of walls
excluding the plinth off set.
 3.3. Measurement met–hods
(cont’d)
The cost of building = volume of building*rate/unit
volume.
3) Unit base method: according to this method the
cost structure is determined by multiplying
the total number of units with unit rate of each
item. In case of schools and colleges, the unit
considered to be as "one student” and in case of
hospital, the unit is “one bed”.
 3.3. Measurement met–hods
(cont’d)
The unit rate is calculated by dividing the actual
expenditure incured or cost of similar building in
the nearby locality by the number of units.
 3.3. Measurement met–hods
(cont’d)
 Measures of changes in items such as location
and building costs are performed using index
numbers. Index numbers are a means of
expressing data relative to a base year. Data
from (year) is being used as the basis for
calculating costs for an other year.
 3.3. Measurement met–hods
(cont’d)
 Conceptual cost estimate: the preparation of
conceptual cost estimates requires knowledge
and experience with the work required to
complete the project. Cost information from
the previous projects of similar type and size is
essential. From the cost records of previous
projects, the estimator can develop unit cost
to forecast the cost of future projects.
 3.3. Measurement met–hods
(cont’d)
UC=(A+4B+C)/6
UC= forecast unit cost
A=minimum unit cost of previous projects
B=average unit cost of previous projects
C=maximum unit cost of previous projects
 PART 4:
RATE ANALYSIS AND
VALUATION
 4.1. Rate analysis
 Rate analysis is a process of determining the
rate of an item considering all factors affecting
the rate of that item.
 Factors affecting the rate:
 Quantity and quality of materials, their
proportion and constructional operation
method.
 4.1. Rate analysis (cont’d)
 Cost of labours and their wages (wage: a fixed
amount of money that is paid, usually every
week, to an employee, especially one who does
work that needs physical skills or strength,
rather than a job needing a college education).
Cost of labour can be classified in to : skilled
1st class, skilled 2nd class and unskilled
labours.
 4.1. Rate analysis (cont’d)
 Transport of materials (conveyance
charges): the distance between the source
of availability of material and construction
site is known as “Lead” and is expressed in Km.
The cost of conveyance of material depends on
lead. The cost include 1st cost, conveyance,
loading, unloading, stocking, charges, etc.
 4.1. Rate analysis (cont’d)
 Overhead charges (indirect expenses and
not productive expenses on the job). They are
2 types: general overheads & job overheads.
1) General overheads: establishment (office staff),
stationary, printing, postage, travelling expenses,
telephone, rents and taxes, etc
 4.1. Rate analysis (cont’d)
2) Job overheads: supervision, handling of
materials, repairs, amenities of labors, workman’s
compensation, insurance, etc.
Overhead expenses may be 5-10%
 Equipment & plant

 Age of data (Time)

 Profit
 4.1. Rate analysis (cont’d)
N.B. The cost of materials are taken as delivered
at site inclusive of the transport, local taxes and
other charges.
 Task: is the quantity of work which can de

done by an artisan for trade working of 8

hours. Although the task is different from
person to person according to their physical
and mental abilities, the average task or out-
turn work is taken into consideration for
preparing rate per unit item.
 4.1. Rate analysis (cont’d)
Task does not mean that the quantity of work
is done by one labour. Other labours or
helpers are also engaged to complete the
given task.
 Earthwork excavation: when preparing

estimates for earthworks, you must take

account of:
 Location of site

 Difficult of terrain
 4.1. Rate analysis (cont’d)
 Access to site and working space
 Rock excavation
 Slope stability
 Temporary erosion and sediment control
 etc
 4.1. Rate analysis (cont’d)
 Purpose of rate analysis:
 To work out the actual cost per unit of the items;
 To workout the economical use of materials
and processes in completing the particular item;
 To work out the cost of extra items which are not
provided in the contract bond, but are to be done;
 To revise the schedule of rates due to increase in
the cost of material and labor or due to
change in technique.
 4.2. Valuation
 Valuation: is the technique of estimating
and determining the fair price or value of a
property such as a building, a factory or
other engineering structures of various types,
land, etc. By valuation, the present value of a
property is determined. The value of a property
depends on its structure, life, maintenance,
location, bank interest, legal control, etc. Cost
means original cost of construction of purchase,
while value means the present value (saleable
value) which may be higher or lower than the cost.
 4.2. Valuation (cont’d)
 Main purposes of valuation:
 Buying or selling property
 Taxation
 Rent function
 Security of loans or mortgage
 Insurance
 etc
 4.2. Valuation (cont’d)
 Depreciation: is the gradual exhaustion
of the usefulness of a property. It is a decrease
or loss in the value of a property due to
structural deterioration use, life wear and tear,
etc. A certain percentage of the total cost may
be allowed as depreciation to determine its
present value. Usually, the percentage rate of
depreciation is less at the beginning and
gradually increase during later years.
 4.2. Valuation (cont’d)
   100  rd n
D  P *( )
100
D=Depreciation value
P= the cost at present market rate
rd= the fixed percentage of depreciation (rate of
depreciation)
n=number of years the building has been
constructed
 Annual depreciation(D)=
 4.2. Valuation (cont’d)
 Gross income: is the total income including all
receipts from various sources. The outgoings,
operational and other expenses are not deducted.
  Net income or net return: is the saving or the
amounts left after deducting all outgoings,
operational and other expenses from the gross
income or total receipt. 
Net income = Gross income – outgoings.
 Outgoings: outgoings include taxes, repair fees,
sinking fund, loss of rent, miscellaneous (e.g.
electrical charges), etc.
 4.2. Valuation (cont’d)
 Sinking fund: the fund which is gradually
accumulated by way of periodic on annual deposit
for the replacement of the building or structure at
the end of its useful life.
S *i
I
(1  i ) n  1

S= total amount of sinking fund to be accumulated

n= number of years required to accumulate the sinking
fund
i= rate of interest in decimal (e.g. 5%=0,05)
I=annual installment required
 4.2. Valuation (cont’d)
 Scrap value: is the value of dismantled
materials. Example for a building when the life is
over at the end of its utility period, the
dismantled materials as steel, bricks, timber,
etc. will fetch a certain amount which is the
scrap value of the building. The scrap value of a
building may be about 10% of its total cost of
construction. The cost of dismantling and
removal of the rubbish material is deducted from
the total receipt from the sale of the useable
materials to get the scrap value.
 4.2. Valuation (cont’d)
 Market value: the market value of a property is
the amount that can be obtained at any particular
time from the open market if the property is put
for sale.
 Book value: is the amount shown in the account
after allowing necessary depreciations. The book
value of a property at a particular year is the
original cost minus the amount of depreciation
up to previous year.
 Annuity: is the annual periodic payments of
the capital amount invested by a party.
 4.2. Valuation (cont’d)
These annual payments are either paid at the end of
the year or at the beginning of the year, usually for a
specified number of years.
 Obsolescence: is the fact that the value of property
or structure becomes less as it is becoming out of
date in style, in structure, in design, etc. an old
dated building with massive walls, arrangements of
rooms not suited in present days and for similar
reasons, becomes obsolete even if it is maintained in
a very good condition, and its value becomes less
due to obsolescence.
 4.2. Valuation (cont’d)
 Capital cost: is the total cost of
construction including land, or the original total
amount required to possess a property.
 Capitalized value of a property: is the amount
of money whose annual interest at the
highest prevailing rate of interest will be equal to
the net income.
 Rate of interest = income/sale price.
 Year’s purchase (Y.P): is the capital sum required
to be invested in order to receive an annuity of Rwf
1 at a certain rate of interest. Y.P = 1/i