Commercial Cost Estimating

 In Cost Estimating

Creating a construction cost estimate can be quite a puzzle. As with puzzle mastery, there are proven methods an estimator should follow to put the pieces together efficiently. These methods—from scoping to quantity takeoff to cost estimating—will produce a thorough, accurate estimate that stays within the project’s budget and timeline.

Before Starting the Estimate: Puzzle Prep

Among the contract documents provided when a project goes out to bid is a scope of work (SOW). An SOW is a detailed statement explaining exactly what is expected of the team in order to complete a particular construction contract. A well-written SOW defines the who, what, when, where and how of a project. The scope should include everything—from required materials and equipment to project milestones and deliverables—so it’s important that you familiarize yourself with it. However, understanding the scope is just one thing you should do before beginning an estimate. It is best to visit the jobsite to gain an understanding of how work will get done and to keep an eye on the weather forecast and develop contingencies for inclement conditions.

 

Quantity Takeoff: Setting Out the Pieces

One of the most exhilarating parts of doing a puzzle is dumping the pieces from the box and watching them spread. It’s a moment alive with possibilities. It’s the instant the challenge officially begins. For the construction estimator, that moment is the quantity takeoff.

The purpose of the quantity takeoff is to provide a complete list of materials, equipment and tasks for an accurate cost estimate. That’s a lot of puzzle pieces. Industry practices have been established to maximize the speed, ease and accuracy of the takeoff process. These practices, including but not limited to the ones below, should be adhered to.

Follow the Leader

It is likely that the person preparing the quantity estimate will also prepare the cost estimate. If not, it is best to follow the takeoff preferences of the cost estimator to prevent confusion and misinterpretation. Use footnotes, symbols or sketches to clarify any ambiguities so the takeoff is as clear and informative as can be.

Takeoff From the Ground Up

A good approach to completing a quantity takeoff is to follow the order of the actual construction, from the footings up to the roof. This will provide a clear mental picture of the project. If a project consists of more than one building, perform a separate quantity takeoff for each building, since unit costs may vary from structure to structure.

Keep Scale in Mind

Check the plan, drawings and details carefully for change in scale, plans reduced from their original scale, notes such as “NTS” (not to scale) or discrepancies between plans and specs. As you go, it doesn’t hurt to do some mental arithmetic if a quantity or measurement seems fishy—drafters make errors too.

Costing the Estimate: Assembling the Pieces

At this point, you’ve dumped out your pieces, organized them and built your frame. Now it’s time to put the puzzle pieces together and apply costs to your takeoff quantities.

Types of Costs

All costs included in a unit price estimate fall into one of two categories: direct costs and indirect costs. Direct costs are those linked to the physical construction of a project. Material, labor and equipment prices are all direct costs, as are subcontractor costs. These are commonly called “bare” or “unburdened” costs.

Indirect or overhead costs are incurred in completing the project but are not applicable to any specific task. They may include items such as supervision, insurance, temporary facilities, professional services and contingencies. Indirect costs are separated into two categories: jobsite overhead and main office overhead.

Jobsite overhead costs are indirect costs associated with the jobsite. They can be estimated in detail but are typically calculated as a percentage of direct costs and included in CSI MasterFormat Division 1 of the estimate.

Main office overhead costs are associated with the operation of the contractor’s main or home office. Overhead costs are typically calculated as a percentage of the total project cost and added at the end of the estimate. Some costs, such as professional services, may be counted as either project overhead or main office overhead, depending on how the resource is used.

Construction Estimating: The Ultimate Puzzle

Estimating for building construction is the ultimate puzzle. Not only are there thousands of pieces to put together, you have to find them yourself—they don’t have the decency to come in a box. But like completing a puzzle, putting together an estimate requires patience, attention to detail and the discipline to orient yourself toward a goal and work toward it.For more tips and advice about mastering the construction estimating puzzle.

At PCI we are experts of commercial construction cost estimating. To reach us call Clint at 480-415-0982 or email at clint@pci1980.com.

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