CE181 CE Law, Contracts & Ethics

LECTURE - 2
CONSTRUCTION COST ESTIMATE
(A TOOL FOR HOUSING SUPPORT SERVICES)

Reynaldo S. Sitjar, Civil Engineer

WORK BREAKDOWN STRUCTURE
 MODULE 1
CONSTRUCTION COST ESTIMATE
ESTIMATE & COST ESTIMATION DEFINED
UNDERSTANDING YOUR PROJECT
TYPES OF ESTIMATION
COMPONENTS IN COST ESTIMATION
BASIC STEPS IN DETAILED ESTIMATION
TECHNIQUES IN DETAILED ESTIMATION
 DEFINITION

Estimates is a logical and sensible assumptions of

the quantities, qualities, values, or degrees of a set
of subjects.

Cost Estimation Models are mathematical

algorithms used to estimate the costs of a product
or a project. This is based on the normal working
conditions, during regular business hours, and
under average conditions.
 UNDERSTANDING YOUR PROJECT
Project Factors it is essential to the development of
effective cost management in design is an
understanding of the basic factors that influence
building costs. The following list of factors can be
controlled by the design professional but can
influence the cost estimate.
Cost data can be presented in two ways: as bare
costs without overhead and profit, and total costs,
which include a mark-up for overhead and profit.
There is no accounting for unpredictable costs
associated with labor resource shortages, supply
and demand cycles, or travel and per diem cost. It
is also important to understand price and crew
size, make adjustments based on experience and
judgment.
 UNDERSTANDING YOUR PROJECT
Build your own database take ownership and keep
your database updated and you will be literally
guaranteed to provide a better cost estimate. This
must be tested to uncover possible errors before
they are incorporated into the estimate.
Project Factors are as follows:
 Location
 Design Factors
 Qualitative Factors
 Contractual Factors
 Time Factors
 UNDERSTANDING YOUR PROJECT
Project Location – cost will be influenced by such
factors as climate and comfort requirements,
building codes and regulations, case of access,
distances from sources of labor and materials.

Market Place – Construction prices are subject to

change according to the laws of supply and
demand. Over-stressed and understressed-
construction markets will affect the level and
quality of competition as well as the prices
charged.
 TYPES OF ESTIMATION

Cost Estimates – is concerned with knowing the

probable total cost of a project.

Quantity Survey – is a preliminary estimation

technique that aims to establish the quantity of
each material for a project, not yet considering
their cost.
Productivity Estimates – is concerned with the
determination of probable cost of labor by logical
assumptions of the productivity of the workers.
 TYPES OF COST ESTIMATION

Bill of Materials – is a list of materials needed for a

project. It usually presents the probable cost for
each item.
Value Engineering – is a review of the plan and
design of a project so as to coordinate with the sizes
and specifications of construction materials. It’s aim
is to avoid wastage and maximize the use of each
material. Value Engineering is also concerned with
other items that may reduce the cost of a
construction project or speed-up the project
construction.
 TYPES OF ESTIMATION
Detailed Estimate – is an estimate that breaks the
subject down into as many items or components
possible. Each component are often described
with specifications.
Rough Estimate – is an estimate that is computed
in general and vague. It is often an assumption by
area, volume, or bulk.

Lump Sum – is an assumption of the totality of an

item without consideration of its specific
components .
 COMPONENTS IN ESTIMATION
1. Materials Component
2. Labor Component
3. Tools & Equipment
4. Trade Contractor or SubContractor
5. Mark - up
a. Contingency Cost
b. Administrative Cost
c. Profit
d. Variations or Extra

NOTE: The importance of understanding variations

and its impact is therefore critical in order to
successfully deliver a Project as well as be fairly
compensated.
 COMPONENTS IN COST ESTIMATION
The Quantity Surveyor’s first task, on visiting the site for Valuation
purposes, is to make himself known to the Site Manager and ensure
that he receives a full site induction or if this is not his first visit to
the site an updating of the current site status from the Site Manager.
The QS may then tour the Works, making notes as necessary of the
extent of work done and listing the quantities of the various
materials and goods stored on the site.  The QS will expect the Site
Manager to have produced a list of materials and quantities on site
and other documentation to assist in the formation of the Valuation.
The PQS and Contractor’s QS will usually prepare and agree the
Valuation before leaving the site; subsequent disputes will thus be
avoided.
 COMPONENTS IN COST ESTIMATION
1. Preliminaries
Preliminaries contained within the BoQ are easily quantifiable; those
contracts which do not have BoQ can prove a challenge and it is
advisable to agree the costs of identified individual preliminary
items at the commencement of the contract or when payment of
individual preliminary items will become applicable.
Preliminaries items are of four kinds, cost-related, time-related,
single-payment or a combination of two or more of these.  The PQS
and QS will agree which Preliminary items fall into which category
at the commencement of the contract. On some contracts the
parties merely agree to consider all items to be time related and
simply divide the total costs of the Preliminaries by the duration of
the contract, such practice is not advisable and should be
discouraged.
COMPONENTS IN COST ESTIMATION
2. Main Contractor’s Work
The value of the work completed by the Contractor will be easily
established using the unit rates contained in the Bills of Quantities;
in the case of Stage or Lump sum contracts the Valuation will be
formulated using agreed schedules between the contracting parties.
 
When valuing the Main Contractor’s work the Surveyor will start
with  the Excavation and Earthwork’ section or the Demolitions of
Works and proceed in BoQ order through all the succeeding work
sections which contain items of work which have been wholly or
partly carried out.  Each item within each section is noted
separately and a completion value assigned to it, indicating by use
of bill item references that which is included in each amount.
COMPONENTS IN COST ESTIMATION
3. Variations
Most projects have Variations, which present a difficulty in the
context of Interim Valuations for several reasons. The JCT Form
requires that effect be given in Interim Certificates to ‘the
measurement and Valuation’ of Variations.  Each Variation must be
valued, either approximately or accurately, as soon as possible after
issue and included within the monthly valuation after the work has
been executed; using the appropriate form of valuing the work (this
is usually the preserve of the QS).
The valuation of variations must not be left until the end of the
contract this could seriously affect cash flow and cost/value
reconciliation calculations and lead to an inaccurate prediction of
contract profitability.
 COMPONENTS IN COST ESTIMATION
4. Statutory Fees and Charges
Any charges and/or fees paid by the Contractor to any local authority or
statutory undertaker for work executed or materials or goods
supplied in the course of carrying out its statutory obligations should
be included in the next Interim Valuation after receipt of such
services.
These costs are usually included in the Bills of Quantity in the form of
Provisional Sums; any sums for profit and attendances will be applied to
the authorities’ charges.
Sums equivalent to cash discounts to the invoiced amounts may not be
added, which invariably will be net;  this exclusion only applies to fees
and charges for work done or goods supplied in discharge of the
statutory obligations of the authorities.
 COMPONENTS
IN COST ESTIMATION
5. Nominated Sub-Contractors’ work
Nominated Sub-Contractors will be informed of the Valuation
date in each month of the main contractors. Provided the QS is
satisfied of the validity of the claim; that is that the work had
been executed and any other aspects of the application for
inclusion into the main contractors Interim Valuation such as
materials on or off site, variations,  fluctuations etc  it will be
included in the next Interim Valuation. Profit and attendance
additions will be included by the Main Contractor on a pro-rata
basis to the appropriate items in the Bills of Quantities.   The
Contractor shall provide proof of payment to any nominated
Sub-Contractor of any sum included in the immediately
preceding Certificate in respect of their work, materials or
goods. 
 COMPONENTS IN COST ESTIMATION
6. Flactuations
It will be specified in the contract documentation, Standard
Building Contract with Quantities gives options in Tax
Fluctuations.
 COMPONENTS IN COST ESTIMATION
7. Retention
It is usual in all forms of the standard forms of building contract for
a percentage of the Valuation total to be deducted.  Thus, the sum
of money deducted is said to be ‘retained’ by the Client and is called
‘Retention’.
The purpose of the retention percentage of the total value of work
completed to date is mainly to provide a degree of protection to the
Client against the effects of the Contractor defaulting,
Exclusions retention applies to certain aspects or activities within
the contract and some contracts may have a limit on the amount of
retention held back from the Contractor.  These are contractual
matters largely outside of the responsibility of the Site manager.
 LABOR COMPONENT
LABOR COMPONENT is usually broken down into a team size
(eg. 1 Carpenter + 2 Helpers) that can execute work at a
determined productivity.
Building a complex rate worksheet for tendering purposes takes
not only technical understanding of that element and materials
involved, but also requires historical productivity, output records
of similar projects, finishes required, market conditions and years
of estimating experience.
 Various % factors can be applied to increase or reduce the
productivity as difficulty is decided at the tendering stage.
 Once this information is extracted from the BOQ rates then
the labor allowable for all trades can be entered into a
spreadsheet; that is the team size, productivity and quantity
for each activity.
 This information will be used to compare against actual costs.
 FACTORS TO BE CONSIDERED
IN A LABOR RATE BUILD-UP
Quantity : The quantity of work to be done is fundamental in determining labor
productivity. Smaller quantities of work dictate lower productivities as a rule, since
there is no learning curve and increased efficiencies gained from repetition.
 Finish : Smooth, rough, on grade, etc. finishes all have a significant impact on
productivity and material to be used.

Access / Location : The access constraints of a site will define what

plant will be used, if concrete should be pumped or not and if a mobile
crane will be required.

Climate : The local weather and seasons in certain parts of the world
have a major effect on productivity, material handling and placing. For
example if you work in very hot areas and you know the concrete will be
cast in summer then ice should be priced in your concrete to cool it
down.

Design : A repetitive design for example in a multi storey building will

greatly improve productivity and cycle times due to the learning curve
and repetition.
 LABOR COMPONENT
Should you however not have the team detail in your priced BOQ then
simply enter the labor component and quantity into the template.

 This information will still allow you to calculate the actual efficiency
but will not assist you in determining team sizes or productivity
required at the start of a project.

 (This will have to be established manually on site).

Projects require an engineer designed structural frame and

foundations. The three major trades involved in constructing such a
frame consist of Concrete, Formwork and Reinforcement. The
combination of these three elements significantly impacts on the price
of a project. Considering that most tenders define the wet works
(structure) of the project in detail and the finishes are usually given as
provisional sums or contingencies, stress the importance of getting
this costing right.
 LABOR COMPONENT
Once the allowable value, productivity outputs and team sizes are
captured we can start feeding in the daily costing and progress
measurement into the template.

 The site foreman is required to record the actual manpower

used each day and identify the activities and quantity of work
that was executed. For example the following information will
be recorded.

 The quantity of the work measured is then entered and the

allowable value is generated. These sums compared against
each other will determine the profit or loss value for that
activity.
 BASIC STEPS
IN DETAILED ESTIMATION
1. Classify the general parts of the project into categories.
2. Break down each category into as many parts, works, or
materials possible.
3. Write down the specifications for each material or component.
4. Use the round-up method for inexact figures.
5. Provide allowances for breakage, wastage, or slack.
6. Compute the materials, labor, and equipment separately. Avoid
computing by percentage of each other. Remember that cost of
labor vary significantly from the type of work to be done.
7. Consider the rental of equipment.
8. Consider all other non-salient components and do not simply
rely on the item - “over-head cost”.
9. Unless otherwise instructed, not forget to include contingency
costs, profit, VAT, and professional and other fees.
10. Always keep a copy of your work.
 WORK BREAKDOWN STRUCTURE

The best way to price these elements if you do not have a

sophisticated estimating program is to use a template designed
for this purpose. A template should allow for adjustment of
resources, material and labor costs, outputs, material usages,
hours of work, plant required, factor options, etc. to calculate an
all inclusive rate for a particular BOQ item. By copying these
sheets and creating separate calculations for each bill item, it will
allow you to develop a very accurate record of rates that cab be
used in your next tender. Once set-up you can simply adjust the
rates by entering the new resource prices. All the rates are
instantly updated and ready for your next tender. We offer such a
template as part of the Tendering Package.
 TERMINOLOGY
Aggregates are materials used in construction, including sand, gravel, crushed
stone, slag, or recycled crushed concrete.
Brick is an artificial stone made by forming clay into rectangular blocks which
are hardened, either by burning in a kiln or sometimes, in warm countries, by
sun-drying.
Concrete Masonry Unit (CMU), concrete block, breeze block, or cinder
block is a large rectangular brick used in construction. Concrete blocks are
made from cast concrete formed into blocks.
Cement Plaster a mixture of suitable plaster sand, Portland cement & water
which is normally applied to masonry interiors and exteriors to achieve a smooth
surface.
Mortar is a material used in masonry to fill the gaps between bricks and bind
them together.
Stucco or Render is a material made of aggregates, binder, and water which is
applied wet, and hardens when it dries. It is used as a coating for walls and
ceilings and for decoration.
 SAMPLE COMPUTATION FOR CONCRETE
PROBLEM:
Determine the number of bags of cement, amount of aggregates, and gallons
of water needed for a wet concrete mix to be poured for a 30-meter long, 1.2 m
wide, and .12 m thick sidewalk. Aggregates are moist.

SOLUTION:
Volume of concrete needed = 30 X 1.2 X .12 X 1.05 (wastage allowance) =
4.536 cu.m.

Type of Concrete Mix = Class AA

Cement = 4.536cu.m. X 10.50 bags/cu.m. = 47.628 or 48 bags

Sand = 4.536cu.m. X 0.42 = 1.90512 or 2 cu.m.

Gravel = 4.536cu.m. X 0.84 = 3.81024 or 4 cu.m.

Water = 48 bags X 5.5 gallons/bag = 264 gals.

less 2.7gal. X 6 cu.m. = 16.2gals.
264 gals. – 16.2 gals. = 247.8 or 248 gals.
 CONCRETE PROPORTIONING
CLASS AA 1:2 :3 (Cement : Sand : Gravel)
CLASS A 1:2 :4 for beams, slabs, columns, and members
subject to bending
CLASS B 1 : 2.5: 5 for members not reinforced for bending
stress
CLASS C 1:3 :6 for footing not underwater
CLASS D 1 : 3.5: 7 for other applications

MIXTURE CEMENT (in bags) SAND (in cu.m.) GRAVEL (in cu.m.)
CLASS AA 12.00 0.42 0.84
CLASS A 9.00 0.44 0.88
CLASS B 8.00 0.44 0.88
CLASS C 7.00 0.44 0.88
CLASS D 6.00 0.45 0.90
 WATER IN CONCRETE MIX
AMOUNT OF WATER PER BAG OF CEMENT:

Type Wet mix Moist mix Dry mix

Footings / Reinf. Walls 28 liters 23 liters 19 liters (liters of

Sidewalks / Steps 21 liters 17 liters 14 liters water per
Fence Post 17 liters 14 liters 13 liters bag mix)

Approximate Quantity of Surface Water Carried

by Average Aggregates:

Aggregate Classification liters/ cu.m.

Very Wet Sand 30 – 40

Moderately Wet Sand 20
Moist Sand 10
Moist Gravel / Crushed Rock 10
COMPUTATION FACTORS FOR CHB, MORTAR, & PLASTER
CONCRETE HOLLOW BLOCKS = 12.5 pcs. per square meter area of
wall

VOLUME FOR MORTAR FILL = 0.0015 cu.m. per piece of 4” CHB

0.003 cu.m. per piece of 6” CHB

VOLUME FOR MORTAR LAY = 0.001016 cu.m. per piece of 4” CHB

(SEATER) 0.001524 cu.m. per piece of 6” CHB

VOLUME FOR PLASTER = 0.00229 cu.m. per piece of CHB (1

side)
0.00458 cu.m. per piece of CHB (2 sides)
 SAMPLE COMPUTATION FOR
CHB, MORTAR, & PLASTER
PROBLEM:
Determine the number 4”-CHB, and amount of cement and aggregate needed
for laid and plastered (2 sides) CHB wall 10 meters in length and 3.2 m. in
height (from the finished floor level), with a 0.90m X 2.10m door and 1.20m X
2.40m window opening. Top of wall footing is 0.60 m. below the finished floor
level.

SOLUTION:
Area of Wall = (10m X [3.2m+0.60m]) – (0.9m X 2.1m) – (1.2m X 2.4m) = 33.23 m2

Number of 4”-CHB needed = 33.23 m2 X 12.5 pcs./m2 = 415.375

415.375 X 1.05 (breakage) = 436.14 or 437 pcs.

Volume of Mortar Fill needed = 437pcs. X 0.0015cu.m./pc. = 0.66 cu.m.

Volume of Mortar Lay needed = 437pcs. X 0.001016cu.m./pc. = 0.444 cu.m.

Volume of Plaster needed = 437pcs. X 0.00458cu.m./pc. = 2.002 cu.m.

Note: Allowance for wastage can be applied after all materials are determined.
 TECHNIQUES IN DETAILED ESTIMATION
1. Avoid constant rounding-up. A part of one bulk of materials
can complete the lacking part of another. Allowances can be
considered after all similar items are computed.
2–½

3–¼

Computation:

2½ + 3¼ + 1¼ = 7 + allowance

instead of
1 – 1/4
2½ [3] + 3¼ [4] + 1¼ [2] = 9 +
allowance
 TECHNIQUES IN DETAILED ESTIMATION

2. In computing the components of frames like wood nailers or

studs, round-up then add one (1).
Length to be framed = 3.00 meters
Space between nailer = 0.40 meter

Computation:

3.00m [divided by] 0.40m = 7.50 [round-up to] 8 [plus] 1 = 9 pcs.

3. In determining the space between frame components (nailer),

consider the dimension of the covering material (ceiling) to
avoid too much wastage. Ex. If the dimension of the covering
material is 1.20m, spacing can be 0.60m, 0.40m, or 0.30m.
 TECHNIQUES IN DETAILED ESTIMATION
4. In estimating the reinforcing bars, consider the anchorage and
bends.
 TECHNIQUES IN DETAILED ESTIMATION
5. Put in to mind the gradual changes in the spacing of ties and
stirrups.
THANK YOU