Week 2 Flashcards
Definition of project cost estimation
The determination of probable costs of any given project where the estimate is prepared before the actual delivery of the project.
Purpose of project cost estimation
A forecast of all direct and indirect costs to complete a project (material, labour, equipment, and administrative costs).
What ways are there to estimate?
- Parametric estimating, first divide a project into units of
work. Then, determine the cost per unit, and then multiply the number of units by the cost per unit to estimate the
total cost. - First Principles is the process of building-up prices, or rates, for an item or piece of work considering all the parts and activities needed to put it together
Example of cost indices
■ General Building
■ Manufacturing
■ Power
■ Water Supply
■ Sewerage/Solid Waste
■ Industrial Process
■ Petroleum
■ Transportation
■ Hazardous Waste
First Principles Estimating factors.
– Waste
– Labour
– Productivity
– Financials
– Overheads
– Contingencies
– Risk
– Profit
Estimate Components - Accuracy factors.
■ Construction materials
■ Labour
■ Equipment
From the Estimate Components, what need to be considered for Construction Materials.
■ Quantity
■ Waste
■ Pricing
Equation for labour cost related.
■ Total cost of labour = Σ total work hour (i) * wage rate (i)
■ Total work hours = Σ quantity of work (i) / productivity rate (i)
Monetary factors
■ Base Wage rates
■ Fringe benefits (extra compensation companies give their employees)
■ Wage premiums
Factors that affect productivity
■ External factors (Market conditions and Environmental conditions)
■ Internal factors (Work conditions and Management conditions)
Direct vs. Indirect Costs
■ Direct Costs:
Material
Labour
Equipment
Subcontracted items
■ Indirect Costs:
Project Field Office
Laydown yard
Project Management
Accounting
Contingencies
■ Contingency is that amount of money added to an estimate to cover the unforeseen needs of the project, construction difficulties, or estimating accuracy.
8 Project Phases
1.Project Establishment
2.Concept Design
3.PreIiminary Design
4.Developed Design
5.Detailed Design
6.Procurement
7.Construction Admin
8.Post Completion
what is Concept Design and Financial Feasibility phase…
Identify a potentially beneficial business opportunity and perform initial analysis, scoping and Order of Magnitude Estimate to determine whether the opportunity is worth further investigation.
Definition of Historical Estimate
This type of estimate uses costs taken from a similar project done in the past. The price can be adjusted for inflation or any different
parameters attached to this particular project.
Preliminary Design Phase or Parametric Estimate….
Perform adequate conceptual design to allow selection of the best of identified project approaches, analyse concept(s) and prepare Cost Estimate to confirm project viability.
Examples of Detailed Design or Detailed Estimate
■ All design parameters are complete.
– CM of concrete, tons of structural steel, interior finishes specified
■ Perform Quantity Take-off of all design parameters (cost components of the project.
– Quantity Take-off - A detailed measurement of materials and labour needed to complete a construction project. These measurements are used to format a bid on the scope of construction.
■ Detailed Estimate performed from unit rates assigned to each quantity take-off of
materials (includes material, labour, equipment, and admin)
– $/m3 of In-situ Concrete
– $/m2 of Gyp Board
– $/m of Fence
■ Detailed Estimate: +/- 5 %
■ Bottom-Up Estimate
The project management structure consisted of…
■ Time
■ Resources
■ Scope
The project can be divided into activities
(WBS) for:
■ Cost estimation
■ Scheduling
WBS stands for…
Work Breakdown Structure
Work Breakdown structure should provide:
Fundamental procedures and activities such as (House –> Groundwork —> Reinforcing —> Pouring)
what is Precedence Diagram Method (PDM)
■ Estimate the duration of each activity
■ Establish relationships between activities
Precedence Relationship consists of:
■ Finish to Start (FS)
■ Start to Start (SS)
■ Finish to Finish (FF)
■ Lag
■ Milestones: 0 duration
Finish to Start relationship
Activity B cannot start until Activity A is finished.
Start to Start relationship
Activity B cannot start until Activity A is started.
Finish to Finish relationship
Activity B cannot finish until Activity A is finished
What is Early start (ES)?
Earliest time an activity can start
What is Early Finish (EF)?
Earliest time an activity can finish
What is Late Start (LS)?
Latest time an activity can start without project delay
What is Late Finish (LF)?
Latest time an activity can finish without project delay
Relationship between Early start and Early finish [Forward pass computations]
ES + Duration = EF
Relationship between Late finish and Late start [Backward pass computations]
LF - duration = LS
Resource Unconstrained Schedule
■ First iteration/initial attempt.
■ No resource or timing constraints.
■ Let relationships between activities drive the computation of project completion date.
■ Shows which activities are TRULY critical.
■ Maximize use of FS relationships.
Equation needed for float calculation
■ Total Float (TF) = LF - ES - dur
■ Start Float (SF) = LS - ES
■ Finish Float (FNF) = LF - EF
Scope Management and Project Planning
Definition of project charter
High level statement of what is to be done and
the boundaries to a project
Brief summary of procedure for project planning
Boundaries to a project/ High level statement –> project brief (detailed documentation) –> method statements (outline how the product will be assembled) –> Work breakdown structure (subdividing the scope of the work into manageable packages) –> Planning of time, cost, labour resources
What is the first step in managing a project
Identify the work required to be undertaken to achieve the deliverable (the product)
Rule of drawing activity nodes
Early start, , Early finish
Float , Activity description/number, Duration
Late start, , Late finish
Rule of drawing activity constraints
■ The critical path – the series of activities that have zero float.
■ Activity float – a measure of an activities flexibility.
■ Free float – float an individual activity can use up without effecting the early start of the next activity.
■ Total float – the float shared with other activities in a group [arm].
Precedence Diagram Method (PDM)
■ Estimate the duration of each activity
■ Initial take-off should be unconstrained
■ Establish relationships between activities
Cons of Precedence Diagram Method (PDM)
■ All goals are based on estimates, which contain uncertainties
■ Estimates of activity times generally include a large safety margin
■ ‘Student syndrome’ may operate: human nature for many of us means activities are left to the last possible minute
■ ‘Parkinson’s Law’ may prevail: an activity will expand to fill the time available
■ The way that progress is measured is in error – by the time the PM is notified of a problem it is already too late to prevent it!
Work Breakdown Structures
■ Disaggregation: break down to finite components of work [Work Packages]
■ Integration: allocate resources
◦ Assign responsibility
◦ Schedule
Category of Work Breakdown Structures
■ Functional
◦ breakdown by location/space & activity/function e.g. Entry, Living Room, Family Room, Kitchen, etc.
■ System
◦ breakdown by building assemblies/systems
■ Component
◦ breakdown by materials
■ Activity
◦ breakdown by tasks
■ Cost
◦ breakdown by cost categories
Definition of Work Package
■ Defined element of work
◦ Series of activities
◦ Result is a deliverable or a major component of a
deliverable
◦ Milestone on schedule
■ Assigned responsibility
■ Scheduled start & finish
■ Budget
Activity Take-off (Resource-load Activities)
■ Allocate resources to each activity
◦ Duration reflects assumed level of resource
◦ Introduce resource constraints
■ Types of Resources
◦ Personnel
◦ Equipment
◦ Space
Fundamental process for Schedule
■ Use of scheduling software to solve project network
■ Convert to bar chart for easy manipulation and communication of schedule information
■ Load with activity resource requirements
■ Identify resource shortfalls
Cause of Unbalanced Bidding
■ Mathematically unbalanced:
◦ Bid containing lump sum or unit bid items which do not reflect reasonable actual costs
■ front loading
◦ Get more money at the beginning of the project by
overpricing the work done early in the project
■ Maximise Profit
■Material unbalance
