Cost Estimating Flashcards
Many projects show … caused by
Massive cost and time overruns caused by under estimates
The aim of cost estimating is
To predict the most likely cost of the project at each stage in the project
Requirements of cost estimating are (5)
Predict most probably cost of works Predict gusts of programs for works Identify and quantify problems/risks State all assumptions and note exclusions Forecast of expenditure
Cost estimates are carried out at
Every stage
Cash flow concerns
The flow of money in and out of an account per time period
A project t that brings in money before it is finished (example)
Housing estates
Cost=
Cost= cost directly attributable to an element of work, including direct overheads
Price=
Cost of an element of work plus allowance for general overheads, insurances, taxes, finance and profit
Things included in the price (5)
Permanent works costs General overhead costs Taxes Interest charges on money borrowed Allowances or contingencies for risks and uncertainties
Average profit margin of a contractor and why
3-5% Very competitive (4-6 bidding on job)
Amount of profit decided by contractor depends on (4)
Type of work
Size of project/contract
Extent of competition
Requirements of organisation to secure work in future
BOQ is created by… but
Created by client but partially completed by contractor
Included in BOQ
Client-item number Description Quantity Contractor-rate Price
5 cost estimating techniques
Man-hour Global Factorial Unit rates Operational
Man hour technique suitable for and used when
Suitable for labour intensive implementation, construction and operations
Used at construction stage only
Total man hours = ..+…+…
Current labour rate+ cost of materials+ cost of equipment
To use man hours technique u need….
Uncertainty is caused by…
Need a detailed program
Uncertainty from over/underestimating total hours
Global method relies on …. is used when
Historical data
Is used to give initial estimates only
Sources of error in global method (5)
Different definitions on cost included Different definitions on the measurement of units of capacity(eg height including ceiling or not) Not comparing like with like Inflation and interest rates Market factors
Factorial technique provides and is used for
A comprehensive list of potential costs
Is used for process plants etc where major item costs can be obtained from suppliers
Advantages and disadvantage of factorial method
No detailed programme needed
Can identify implementation problems
Lead times for equipment delivered
Not reliable for site workers
Unit rate technique involves
Using historical rates in the BOQ
Operational method involves
Total cost found by considering constituent operations and activities using method statement and accumulated demand for resources
Benefits of operational technique and requirements
Reliable
Uses current rates
Must use accurate data collection and risk identification
Must focus on high risk areas
