2. Today’s Lecture
Is Cost Estimating an Art or a Science?
What is an Estimate?
What is the Purpose of Estimating?
What is the Role of the Estimator?
What the Estimator Must Know (Skills)?
The Components of an Estimate.
Possible Sources of Errors in Cost Estimates.
3. Is Cost Estimating an Art or a Science?
Before answering this question, let us first define what is an Art ?
And what is a Science ?
An art is the process of arranging elements in a manner that affects senses and
emotions. It involves imagination and creativity.
A science is the systematic approach to gathering knowledge and data based on
laws and theories.
• ٣
Cost estimating involves calculating cost as well as visualization of
how the project will be built, therefore, cost estimating is a blend of
both art and science.
4. What is an Estimate?
An estimate involves calculating the costs of
construction work on the basis of probabilities.
Two activities are undertaken when carrying out a
cost estimate:
Measurements: all measurements are approximate.
Pricings: the degree of approximation is even greater
because of the difficulty in predicting all the
probabilities of items such as labor productivity and
site conditions.
5. What is an Estimate?
Costs of construction work are classified as:
1. Materials costs.
2. Labor costs.
3. Equipment costs.
4. Overhead (general and job) costs.
5. Profit.
Data on all of these costs are required to develop or
prepare an estimate.
6. What is the Purpose of Estimating?
• The purpose of estimating is to forecast (predict) the cost required to
complete a construction project in accordance with the contract plans and
specifications.
• There are two distinct tasks in estimating:
To determine the probable real cost of the project.
To determine the probable real time to build the project.
Because construction estimates are prepared before
a project is constructed, an estimate is, at best, a
close approximation of the actual costs.
7. What is the Purpose of Estimating?
The true value of the project will not be known until
the project has been completed and all costs have been
recorded.
Therefore, the estimator does not establish the cost of a
project; he simply establishes the amount which the
contractor will receive for constructing the project.
8. What is the Role of the Estimator?
• The estimator’s job is to prepare estimates of
building project costs.
• The success of a contractor’s business depends on
the accuracy of these estimates.
• The estimator’s success will be based on his
previous experience and knowledge of the
construction industry.
• A contractor or estimator lacking this experience
may over-, or under-estimates his project costs.
9. What is the Role of the Estimator?
• In either case, this could impact the success of his
company:
• If costs are too high, his jobs will be few and far
between.
• If costs are too low, he will not be able to stay in
business.
• All cost data is acquired from experience. If an
estimator does not have cost data from his own
experience, he must use cost data from price
books and handbooks.
10. What is the Role of the Estimator?
The more valid data the estimator has available, the better he will be able to
estimate the probabilities of costs.
1. Site location and accessibility.
2. Subsurface and soil conditions.
3. Time and season.
4. Climatic conditions.
5. Wage agreements.
6. Strikes.
7. Market prices of basic materials.
8. Availability of money.
9. The demand for construction.
11. What the Estimator Must Know (Skills)?
He must have a through knowledge of the building trades.
1. This includes types of construction and methods of
construction.
He must be able to read building plans and notes, and understand
the specifications.
1. If he finds any discrepancies between the plans and
specifications, he will bring them to the attention of the
architect or owner for solution.
2. When all the questions are answered and problems are
solved, he can then prepare and finish the cost estimate.
12. What the Estimator Must Know?
He must have a thorough understanding of the building codes
in the area where the building project is to be constructed.
He must have a thorough understanding of construction
materials.
1. He must understand the sizes, strengths, and the capabilities
of the materials with which he works.
2. He must be able to substitute equal quality materials when
specified material are not available.
13. What the Estimator Must Know?
He must keep up with the development of new
construction products and materials.
To keep current, he should frequently visit trade shows
and subscribe to building magazines.
He has to possess some basic mathematical ability.
He has to have at his fingertips reference materials,
books, tables, and tabulating equipments to speed up
his job.
In time he will acquire reference materials in the form
of material catalogs, brochures, and manufacturer
specification sheets for the product the uses.
14. What the Estimator Must Know?
Finally, he must project (forecast) labor cost
changes.
The estimator must realize that labor costs
may vary in different geographical areas of the
country.
He must also realize and project in his
estimates future increases in labor costs
because of upcoming events.
15. The Components of an Estimate
Most estimates are made up of the following five
parts:
1. Materials: The estimator makes a take-off of all
the different materials required on the project
from the plans and specifications.
2. Labor: The estimator estimates the hours
needed to do the required work and then
multiply by the appropriate wage.
3. Equipment: The cost of equipment includes
ownership or rental fees, moving to the job site,
erecting, dismantling and operating.
16. The Components of an Estimate
4. Overhead: There are two types of overheads:
4a. General overhead: includes all costs that can not
be directly charged to any particular project, such
as the cost of office supplies, rent, travel expenses
and salaries.
4b. Job overhead: includes all costs which apply
directly to the project and can not be charged to
materials, labor, or equipment.
5. Profit: Most estimators show the profit expected
from a job as a percentage of the total estimated
cost of the project. The profit varies from 6-15%.
17. The Components of an Estimate
Approximate profits usually expected are: Small
projects 15%
• Medium projects- 12%
• Large projects- 10%
• Very large projects 6-8%
18. Possible Sources of Errors in Estimates
1. Mistakes in material take-offs.
2. Errors in carrying forward material from quantity
sheets to summary sheets and from there to direct cost
sheets.
3. Mistakes in estimating the labor time required for
certain items of work.
4. Errors in estimating hourly wages of labor.
5. Failure to allow for rising costs of materials.
6. Failure to allow for delays due to breakdown of
machines and acts of God (e.g. earthquakes and
storms).
19. Possible Sources of Errors in Estimates
7. Making no provisions to have estimates
checked.
8. Insufficient allowance for overhead.
9. Omission of profit.
