ESTIMATING

OVERVIEW

Niraj Pancholi & Meet Patel

Date: 10/10/2023
 ESTIMATING AND COST ANALYSIS IN
CONSTRUCTION

TABLE OF CONTENT:

 Introduction
 Characteristics of an estimate.
 What do we use an estimate for?
 Types of estimation
 Estimation methods
 Types of costs
 Importance of Contingency and Escalation
 Estimate standards
 Levels of Accuracy
 Importance of Estimation
 Tools & Software
 Case Study in Heavy Bid
 Goal of Estimating
 WHAT IS ESTIMATING?
 Estimating, in a business or project context, refers to the process of
predicting or calculating the likely costs, quantities, or other relevant
factors associated with a specific task, project, or activity.

 It is a fundamental aspect of project management, business planning,

and decision-making.

 Estimating involves “making educated guesses or informed

projections” based on available data and knowledge.

 It is an “opinion of probable cost” for a scope of work

 It is not “exactamating”, It always comes with the range.
 CHARACTERISTICS OF AN ESTIMATE

8. Change
1. Clear Idetification Significant Changes
of Task & Submit

7. Independent
2. Availibility of data Review of
Estimates

3. Standardized
6. Recognition of
Structure for the ESTIMATE Excluded Cost
estimate

5. Recognition of
4. Provision for
Escalation &
Uncertainties and Risk
Contigency
WHAT DO WE USE AN ESTIMATE FOR?

FEASIBILITY 0 BENCHMARKIN
G&
0
STUDY
1 DATABANKING 5

0 EVALUTE
COMPETING
0 VALUE
ENGINEERING
2 CONCEPTS 6
ESTABLISHING 0 CHANGE ORDER
PROJECT
ACCURACY 07
BUDGET 3

0 CAPITAL LUMPSUM OR
FUNDING 08 BID CHECK
4 REQUEST PROPOSALS
 TYPES OF ESTIMATION

An early-stage Ballpark Estimate that outlines the

Preliminary expected costs of a project before detailed planning or
30% engineering design work.

MAJO An initial estimate used to allocate funds for a project

R Budget or task, often based on historical data or industry
TYPES benchmarks with availability of 60% engineering
design work.

A Definitive Estimate, backed by extensive and precise

project data, is employed for bidding purposes to secure
Detailed client orders, encompassing 90% engineering design
work.
 ESTIMATION METHODS

PARAMETRIC BOTTOM-UP HISTORICAL

 TYPES OF COSTS (IN GENERAL)

Direct Indirect
Cost Cost

• Labor Cost • Taxes

• Material Cost • Fees

• Steel • Construction Management
• Concrete
• Electrical Instruments • Engineering
• Piping etc. • Utilities, Rent and Facilities
• Equipment Cost • Escalation
• Sub-Contractor’s Cost • Contingency
Contingency: A contingency refers to an event or situation that is possible but not certain to occur. It is
often used in the context of planning, risk management, and decision-making to describe potential future events
or circumstances that may or may not happen.
Escalation: In simple terms, refers to the increase in the cost (could be labor, materials or goods) over the time.
Labor Rate Escalation Chart:
Escalation:
 ESTIMATE CLASSIFICATION
AACE
Class 1º
CII
Level
Purpose of
Estimate
% Accuracy
Range
% Engineering
Complete

Class 05
2º
FEP 00 Concept -20% to +100% 0% to 02%

Class 04
2º
FEP 01 Study / Feasibility -15% to +50% 1% to 15%

Class 03
2º
FEP 02 Budget / Control -10% to +30% 10% to 40%

Class 02 Tender -05% to +20% 30% to 75%

FEP 03
Bid Check
Class 01 -03% to +15% 65% to 100%
Estimate
LEVELS OF ACCURACY FOR EACH STAGE OF A PROJECT
 IMPORTANCE OF ESTIMATION

Strategic Financial Decision-

Planning Planning Making

Cost Control Resource Competitive

Allocation & Pricing
Optimization
 GOAL OF ESTIMATING

1 2 3
Help our clients
make fact-based
decisions
based on Make Our Clients
Create Amazing Successful
incomplete
information
(scope of work)
Key Factors that Drive Accuracy of an Estimate

Environmental, Project
Project
Regulatory ROW, Land and
Regulatory and Definition and Logistics
Logistic
Easements
Easements s
andPolitical
Political Engineering

Level of Effort Economic and

Historical Cost Risk
and Skill of Market
Market
Data
Data Assessmen
Assessment
Estimator
Estimator Conditions
t