Cost Estimation Flashcards
Purpose of Cost Estimation
- Project viability
- Option comparison
- Funding approvals
- Cost control
- Programming/Cashflow
- Financial Planning
Phasing of Cost Estimates
- Detailed
- Preliminary
- Concept/Multiple Options
3-1: Accuracy and Reliances increases
1-3: Estimate uncertainty reduces
Accuracy of Cost Estimates
- Concept: +/- 50%
- Pre-Feasibility: +/- 30%
- Feasibility: +/- 25%
- Preliminary Design: +/- 20%
- Detailed Design: +/- 15%
Capital Cost Estimate - CAPEX
- Land acquisition or access agreements
- Concept and pre-feasibility studies
- Resource consent applications with associated supporting studies, hearings, environment court
- Investigations to support design
- Design: preliminary through to detailed
- Building consents + 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
Design Fees
- Concept
- Pre-feasibility
- Feasibility
- Preliminary
- Detailed design
(Rule of thumb (5-10%) of Capital for all stages, but dependent on project)
Field Investigations examples
- Geotechnical investigations
- Geological
- Topographical survey
- Contaminated site
- Hydrological
- Water quality
Approvals
- Resource Consents
- Property owner conditions of access
- Legal Fees
Specific to the site, scale and location
Bill of Quantities - General Items
- Preliminary and General
- Mobilisation
- Management Plans and Submittals
- Miscellaneous
- Demobilisation
15% of project costs
Bill of Quantities - Specific Items
- Earthworks quantities
- Concrete volumes
- Pipes
etc
Operating Cost Estimate - OPEX
Depends on project by may include:
- Operator fees
- Power supply
- Maintenance contract
- Materials
- Administration
- Annual reporting
- Monitoring
Net Present Value - NPV
NPV is 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
Often used to compare projects at optioneering stage
Engineers Estimate
- Based on bill of quantities
- Rates based on experience/similar jobs and reference materials
- Accuracy +/- 20%
Construction Cost Estimate Tender Price - Earthworks factors
- Haul distance
- Machine type
- Machine numbers
- Time of year
- Site commute
- Grade (fuel use)
Construction Cost Estimate Tender Price - Materials factors
- Standard size
- Lead time
- Delivery cost
- Machinery needed to install
- Labour to install
Summary of Tender Price Basis
Calculated by combination of:
- Basic $/hr or $/m^3 estimate
- Machinery
- For major earthworks Software
- Materials
- Percentage allowance for General items
- Contingency as % of overall cost estimate
Independent Check
- Quantity Surveyor for costs
- Technical peer reviews
- Independent construction advice on constructibility and risk
Construction Cost Estimate vs Tender Price
Difference
- Contractors margin
- Risk assessment
- Huger for the job
- Speciality/efficiencies not identified by the engineer
- Supplier relationship
Tender Evaluation - Weighted Attributes
- Relevant experience and track record
- Organisational structure methodology
- Resources
- Programme
- Price
Actual Construction Cost - what causes the changes
- Unforseen ground conditions
- extreme weather
- design inconsistencies
- supplier delays
Actual Construction Cost - who wears the costs
- variations
- contract and specification details become important
Financial Risk Assessment
- Probabilistic cost estimation
- Accounts for project risks, cost of risks and probability
- Financing often based on P80 or P90 cost
Summary Project Cost Elements
- Land purchase/easement
- Resource consents
- Field investigations
- Design: Concept to detailed
- Construction
- Regulatory fees
