Estimating Flashcards
What is direct cost?
Anything that has a discrete physical cost associated with the project
What is indirect cost?
Anything that does not have a discrete physical cost associated with the project
What are the 6 levels estimates?
1) Conceptual Estimate project (feasibility studies)
2) Estimate to Evaluate Alternate Design
3) Owner’s Engineer’s Estimate
4) Contractor’s Bid Estimate
5) Alternative Construction Methods Estimate
6) Change Orders or Claim Estimate
What is conceptual estimate?
owner’s general scope of the project
↳ used for a broad estimate of the project
What is estimate to evaluate alternate designs?
Estimates based on past projects with similar scopes
↳ uses unit prices and rough quantifications of units
What is owner’s engineer’s estimate?
- The estimate is given after the design is 80 -90% completed
- Based on quantity takeoff
- Relays on past bid abstracts
- Will likely not consider construction methods
What is contractor’s bid estimate?
- Most detailed out of all the estimates
- Based on the contractor’s Quantity takeoff (QTO)
- Will consider construction methods
- based on contractor’s detailed cost record
What is alternative construction methods estimate?
- identify a cheaper way of getting the job done
- the goal is to maximize profit
What is change orders or claim estimate?
Estimate for change orders
What are the 7 cost categories?
- Labour (L)
- Permanent Materials (PM)
- Expendable Materials (EM)
- Subcontracts (S)
- Equipment Operating Expense (EOE)
- Repair and Service Labor (RL)
- Rental (R)
- Operated and Maintained (O&M rental)
What level of risk does labour have and why?
Highest risk cost element
- Direct labour is the most volatile
- Highly productivity-related
- The most difficult cost to estimate and control during project performance
What level of risk does permanent material have and why?
Low Risk
- Not productivity related
- Can be accurately determined and is therefore not volatile
What level of risk does expendable material have and why?
Less risk than direct labour but still potentially high risk
- Not particularly productivity-related but can be very difficult to determine accurately and are thus always volatile to some extent
- In some projects can be highly volatile
What level of risk does subcontracts have and why?
Low Risk if covered by performance bond
- Highly productivity-related from subcontractor’s point of view
- But, not productivity-related from prime contractor’s point of view provided that the subcontractor’s quote entered in the prime contractor’s bid estimate is secured by a 100% performance bond
What level of risk does equipment operating expense have and why?
Not necessarily risky but can be if operating under harsh conditions
Highly related to the kind of work being performed and can be fairly volatile on equipment intensive jobs
What level of risk does repair and service labour have and why?
Shares risk attributes of Direct Labor but normally will not be as high a cost
What level of risk does rental have and why?
Could be risky?
- Highly dependent on the type of construction project and on the contractor’s business philosophy and equipment policy
- In-house rental
- Third party rental
What level of risk does operated and maintained have and why?
Can be highly risky if no incentive
But not particularly risky if rental or owned
- With the exception of O&M rental this cost element is not particularly volatile
- O&M rental, however is highly productivity related and is just as volatile as direct labor
What is permanent material? Give an example
Material that is in between the neat lines of the construction drawing. Usually very low risk since it is very clear on what the quantity is.
Ex. A foundation slab in the drawing. You know all the dimensions and therefore the amount can be determined.
What is expendable material? Give an example
Material that falls outside the neat line of a constriction drawing.
Ex. Formwork. When pouring the form, the overflow would be considered expendable material.
What costs are included in the EOE category of cost?
- Fuel, Oil, Grease (FOG)
- Tires
- Small repairs parts (spark plugs, oil filters etc)
- 3rd party overhaul
List all different options for supplying equipment to your project
- Rental
- O&M (Operated and Maintained)
- In house rental from another division
- Joint venture with another company
- Buy and Sell
What 3 items are generally included in Markup?
- Risk Coverage
- Home office
- Profit
Provide a sketch detailing the different types of contingency that management needs to consider.
Contingency
Identified => productivity hedge, soft subs, special risk
unidentified => covered in markup
In a schedule of bid-item bid identify the costs that when added together make up the total amount to be distributed
• Indirect: Job Office, Safety, Time/Non-time Related expenses, Insurances, Taxes
• Direct cost: materials, direct labour, subcontractor costs
• Escalations: Price of supplies and materials increasing
• Markup: % of the total cost, % of the labour, and consideration of the total horizontal
distribution
• Contingency: Money that might need to be readjusted or set aside for potential accidents. Can
be separated into identified/unidentified
• Interest: When borrowing money, the money will have a fee associated with it that the owner
will have to pay
What guidelines would you follow in distributing your fixed costs + markup to the individual big items of a schedule-of-bid-items bid?
List the 5 categories of indirect costs and provide an example for each.
- Salaried Payroll: Management, engineering, supervision
- Time-related overhead: Warehouse operation, supplies, utility bills
- Non-time-related overhead: office furniture, office equipment
- Insurance and taxes: explains its self
- Construction plants in-and-out: Fencing, surfacing, furnish buildings
What two contract provisions do you need to read and understand before conducting a quantity takeoff?
Explain the significance of each of these provisions?
List the 5 takeoffs that could be required for a particular bid item.
- Work quantity
- Pay quantity
- Permanent material
- Expendable material
- Subcontractors
List the different quantity takeoffs that you would complete for the structural concrete bid item for a bridge pier.
