Cost Estimation

Question 1

What is the purpose of cost estimation?

Answer 1

• project viability
• option comparison
• funding approvals
• cost control
• programming/ cashflow
• financial planning

Question 2

What are different phases of cost estimates?

Answer 2

• feasibility estimate (FE)
• Option estimate (OE)
• Scheme Estimate (SE)
• Pre-design estimate (PE)
• Design estimate (DE)
• Construction Estimate (CE)

Question 3

What is the accuracy of cost estimates in concept stage?

Answer 3

50%

Question 4

What is the accuracy of cost estimates in pre-feasibility stage?

Answer 4

30%

Question 5

What is the accuracy of cost estimates in feasibility stage?

Answer 5

25%

Question 6

What is the accuracy of cost estimates in preliminary design stage?

Answer 6

20%

Question 7

What is the accuracy of cost estimates in detailed design

Answer 7

15%

Question 8

Capital cost estimate - CAPEX

Answer 8

• land acquisition
• pre-feasibility studies
• resource consent
• investigations
• design
• consents + fees
• construction
• supervision
• insurance and taxes
• construction overheads
• inspections, testing

Question 9

Design fees are dependent on…

Answer 9

project complexity, site constraints, number of options assessed, field investigations, etc

Question 10

Stages of design, where fees are present:

Answer 10

• concept
• pre-feasibility
• feasibility
• preliminary
• detailed design

Question 11

Examples of field investigations:

Answer 11

• geotechnical investigations
• geological
• topographical survey
• contaminated site
• hydrological
• water quality

Question 12

Approvals needed for

Answer 12

• resource consents (technical studies, consent hearing, environment court, management plans)
• property owner conditions of access
• legal fees

Question 13

General items on a construction cost estimate “bill of quantities”

Answer 13

• P&G
• mobilisation
• management plans and submittals
• misc
• demobilisation

Question 14

Specific items on a construction cost estimate “bill of quantities”

Answer 14

• earthworks quantities
• concrete volume
• pipes
  etc

Question 15

Operating cost estimate - OPEX may include

Answer 15

• operator fees
• power supply
• maintenance contracts
• materials
• administration
• annual reporting
• monitoring
  etc

Question 16

What is net present value NPV?

Answer 16

The present value of a project based on projected future cash inflows discounted back to current day rates compared to current investment - discounted back to current day rates

Question 17

Explain an engineers estimate:

Answer 17

• based on bill of quantities
• rates based on experience/ similar jobs and reference materials
• may use an independent QS

Question 18

What factors would a contractor consider for a earthworks construction cost estimate tender price?

Answer 18

• haul distance
• machine type
• machine numbers
• time of year
• site commute
• grade

Question 19

What factors would a contractor consider for a materials construction cost estimate tender price?

Answer 19

• standard size
• lead time
• delivery cost
• machinery needed to install
• labour to install

Question 20

What is the difference between construction cost estimate and tender price?

Answer 20

• contractors margin
• risk assessment
• hunger for the job…
• speciality/ efficiencies not identified by the engineer
• supplier relationship

Question 21

What are some weighted attributes of a tender evaluation?

Answer 21

• relevant experience and track record
• organisational structure
• resources
• programme
• price

Question 22

What changes the actual construction cost?

Answer 22

• unforeseen ground conditions
• extreme weather
• design inconsistencies
• supplier delays

Question 23

What is financial risk assessment?

Answer 23

Probablistic cost estimation
- what are the risks to the project
- how do these relate to cost
- what is the likelihood of each risk
Accounts for project risks, cost of risks and probability

Question 24

Project cost elements included:

Answer 24

• land purchase/ easement
• resource consents
• field investigations
• design
• construction
• regulatory fees