Cost Estimating Flashcards
Why is cost estimated needed?
- To predice the most likely cost of the project at each stage
- To identify and quantify potential problems
- To state all assumptions/ exclusions
- Forecast of expenditure
When is cost estimation required?
At each stage
Define Cash Flow
A cash flow is a financial model, concerning the flow of money in and out of the account per time period of the project or contract.
Effect of delayed completion or sanction
Loss of benefit after a set period of time
Increased investment cost
What is cost?
The cost directly attributable to an element of work
Eamples of Cost
- Material Costs
- Labour Costs
- Plant and Equipment Costs
- Lump Sum Costs
- Direct Overhead Costs
- Temp Works Costs
What is Price?
The cost of an element of work, plus allowance for general overheads, insurances, taxes, finance and profit (Final Price)
Examples of Price
- Permanent Work Costs
- General Overhead Costs
- Taxes
- Interest charges
- Allowances for risk
Factors that effect profit
- Type of work
- Size of project/contract
- Exent of completion
Man- Hour Technique
Total Man Hours= Current Labour Rates+ Cost of Materials +Cost of Equipment
- A detailed programme is required when using this technique to identify constraints associated with the project
- Uses Current Labour Rates
Global Technique
- Relies on historical data
e.g: Cost per m^2 of building
The use of historical data is beset with dangers: - Risk of change of inflation rate
- Different definitions of what is included
- DIfferent definitions of measurement of capacity (E.g. Measuring from different points)
- Not comparing like with like
-Market factors - Different unit costs
Factorial Technique
- Comprehensive list of potential costs
- Mainly used when the project has major items of plant (Price easily obtained)
- Does not require a detailed programme
- Can identify problems of implementation
- Lead times for equipmet deliveries
- Not reliable for site works inc. most civil works
Unit Rate Technique
- Based on Bill of Quantity
- Use historical rates of each item form recent similar contracts
What is the Bill of Quantities?
A schedule of work elements or activities, required to execute the contract
Who creates the Bill of Quantities?
Contractor
