Cost Estimation Flashcards
Purpose of Cost Estimation
- project viability
- option comparison
- funding approvals
- cost control
- programming / cashflow
- financial planning
Phasing of Cost Estimates
- Feasability Estimate (FE)
- Option Estimate (OE)
- Scheme Estimate (SE)
- Pre-design Estimate (PE)
- Design Estimate (DE)
- Construction Estimate (CE)
I & R
Investigation and Reporting
PFR
Project Feasability Report
D & PD
Design and Project Documentation
Accuracy of Estimate at Concept Stage
+/- 50%
Accuracy of Estimate at Pre-Feasability
+/- 30%
Accuracy of Estimate at Feasability
+/- 25%
Accuracy of Estimate at Preliminary Design
+/- 20%
Accuracy of Estimate at Detailed Design
+/- 15%
Accuracy of Estimate at Tender Price
actual price + variation
Capital Cost Estimate could include:
- land aquisition or access agreements
- concept and pre-feasability studies
- resource consent applications with associated supporting studies, hearings, environment court (if applicable)
- investigations to support design
- design - preliminary through to detailed
- Building Consents and regulator fees
- construction, including materials, equipment and labour
- field supervision of construction
- construction financing
- insurance and taxes during construction
- construction overheads
- inspections, testing, environmental compliance monitoring
CAPEX
Capital Expenditure
Design Fees
- concept
- pre-feasability
- feasability
- preliminary
- detailed design
rule of thumb: (5-10%) of capital for all stages - but very dependant on project complexity, site constraints, number of options assessed etc
Preliminary-Technical Studies
- river hydrology and morphology
- canal and intake structure hydraulics
- seismic hazard assessment
- geotechnical investigations
- initial geometric design
Detailed Design
- detailed hydraulic analysis
- earthworks and linear design/alignment conformation
- structural design
- construction drawings and building consent application
- assistance with procurement and tender evaluation
Field Investigations
- geotechnical investigations
- geological
- topographical survey
- contaminated site
- hydrological
- water quality
Approvals
- Resource Consents
- Property owner conditions of access
- Legal Fees
General Items in “Bill of Quantities”
approx. 15% of project cost
- P & G
- Mobilisation
- Management Plans and Submittals
- Misc.
- Demobilisation
Specific Items in “Bill of Quantities”
- Earthworks quantities
- concrete volumes
- pipes
- etc.
Operating Cost Estimate could include:
- operator fees
- power supply
- maintenance contracts
- materials
- administration
- annual reporting
- monitoring
OPEX
Operating expenditure
NPV
Net Present Value
- the present value of a project based on projected future cash inflows discounted back to current day rates compared to current investment
- often used to compare projects at the optioneering stage
Engineers Estimate
- based on bill of quantities
- rates based on experience / similar jobs and reference materials
- may use an independent QS
- accuracy +/- 20%
What factors should a contractor consider in tender price for earthworks?
- haul distance
- machine type
- machine numbers
- time of year (work hours)
- site commute
- grade (fuel use)
What factors should a contractor consider in tender price for materials?
- standard size
- lead time
- delivery cost
- machinery needed to install
- labour to install
independant checks
- quantity surveyor for costs
- technical peer reviews
- independent construction advice on constructability and risk
what is the difference between construction cost estimate versus tender price?
- contractor’s margin
- risk assessment
- Hunger for the job
also: - speciality/efficiencies not identified by the engineer
- supplier relationship
Tender Evaluation Weighted Attributes
- relevant experience and track record
- organisational structure
- resources
- programme
- price
What changes the actual construction cost
- unforseen ground conditions
- extreme weather
- design inconsistencies
- supplier delays
Who wears changes in actual cost
- variations
- contract and specification details become important
Financial Risk Assessment
- what are the risks to the project
- how do these relate to the cost
- what is the likelihood of each risk
- probabilistic cost estimation
- accounts for project risks, cost of risks and probability
- financing often based on the P80 or P90 cost
Project Cost Elements
- land purchase/easement
- resource consents
- field investigations
- design
- construction
- regulatory fees
Cost Approach
- accuracy of estimate increases with design detail
- approach to estimate should be based on complexity of project
- always apply contingency
