Preliminary Cost Estimate

Question 1

What is a cost estimate?

Answer 1

A predictionof cost based on the avliable data at a given stage of a construction project.

Question 2

What are the 5 items that should be included in a cost estimate?

Answer 2

Direct costs, indirect costs, inflation, contingency, mark-up.

Question 3

What is the gross internal area (GIA) of a floor?

Answer 3

The area of a buiding measured from the internal face of the perimeter walls.

Question 4

What is the cost rate of a project in a preliminary cost estimate?

Answer 4

The approximate £/m2 value for the type of construction and quality level based on previous project data.

Question 5

Whats the formula for the construction cost in a preliminary cost estimate?

Answer 5

Construction cost = cost rate x GIA x location adjustment x inflation factor

Question 6

How is the contingency cost calculated?

Answer 6

The contingency cost is taken as a percentage of the construction cost (usually 5-15%).

Question 7

What is the tender price index (TPI)?

Answer 7

A scale that represents the cost of construction work at a given time based on inflation, market considerations etc.

Question 8

How is the inflation factor calculated?

Answer 8

The ratio of the TPI at the expected start of construction and a standard TPI value given in a cost book.