Week 2

Question 1

Definition of project cost estimation

Answer 1

The determination of probable costs of any given project where the estimate is prepared before the actual delivery of the project.

Question 2

Purpose of project cost estimation

Answer 2

A forecast of all direct and indirect costs to complete a project (material, labour, equipment, and administrative costs).

Question 3

What ways are there to estimate?

Answer 3

• 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

Question 4

Example of cost indices

Answer 4

■ General Building
■ Manufacturing
■ Power
■ Water Supply
■ Sewerage/Solid Waste
■ Industrial Process
■ Petroleum
■ Transportation
■ Hazardous Waste

Question 5

First Principles Estimating factors.

Answer 5

– Waste
– Labour
– Productivity
– Financials
– Overheads
– Contingencies
– Risk
– Profit

Question 6

Estimate Components - Accuracy factors.

Answer 6

■ Construction materials

■ Labour

■ Equipment

Question 7

From the Estimate Components, what need to be considered for Construction Materials.

Answer 7

■ Quantity

■ Waste

■ Pricing

Question 8

Equation for labour cost related.

Answer 8

■ Total cost of labour = Σ total work hour (i) * wage rate (i)

■ Total work hours = Σ quantity of work (i) / productivity rate (i)

Question 9

Monetary factors

Answer 9

■ Base Wage rates

■ Fringe benefits (extra compensation companies give their employees)

■ Wage premiums

Question 10

Factors that affect productivity

Answer 10

■ External factors (Market conditions and Environmental conditions)

■ Internal factors (Work conditions and Management conditions)

Question 11

Direct vs. Indirect Costs

Answer 11

■ Direct Costs:
Material
Labour
Equipment
Subcontracted items

■ Indirect Costs:
Project Field Office
Laydown yard
Project Management
Accounting

Question 12

Contingencies

Answer 12

■ Contingency is that amount of money added to an estimate to cover the unforeseen needs of the project, construction difficulties, or estimating accuracy.

Question 13

8 Project Phases

Answer 13

1.Project Establishment
2.Concept Design
3.PreIiminary Design
4.Developed Design
5.Detailed Design
6.Procurement
7.Construction Admin
8.Post Completion

Question 14

what is Concept Design and Financial Feasibility phase…

Answer 14

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.

Question 15

Definition of Historical Estimate

Answer 15

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.

Question 16

Preliminary Design Phase or Parametric Estimate….

Answer 16

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.

Question 17

Examples of Detailed Design or Detailed Estimate

Answer 17

■ 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

Question 18

The project management structure consisted of…

Answer 18

■ Time
■ Resources
■ Scope

Question 19

The project can be divided into activities
(WBS) for:

Answer 19

■ Cost estimation
■ Scheduling

Question 20

WBS stands for…

Answer 20

Work Breakdown Structure

Question 21

Work Breakdown structure should provide:

Answer 21

Fundamental procedures and activities such as (House –> Groundwork —> Reinforcing —> Pouring)

Question 22

what is Precedence Diagram Method (PDM)

Answer 22

■ Estimate the duration of each activity
■ Establish relationships between activities

Question 23

Precedence Relationship consists of:

Answer 23

■ Finish to Start (FS)
■ Start to Start (SS)
■ Finish to Finish (FF)
■ Lag
■ Milestones: 0 duration

Question 24

Finish to Start relationship

Answer 24

Activity B cannot start until Activity A is finished.

Question 25

Start to Start relationship

Answer 25

Activity B cannot start until Activity A is started.

Question 26

Finish to Finish relationship

Answer 26

Activity B cannot finish until Activity A is finished

Question 27

What is Early start (ES)?

Answer 27

Earliest time an activity can start

Question 28

What is Early Finish (EF)?

Answer 28

Earliest time an activity can finish

Question 29

What is Late Start (LS)?

Answer 29

Latest time an activity can start without project delay

Question 30

What is Late Finish (LF)?

Answer 30

Latest time an activity can finish without project delay

Question 31

Relationship between Early start and Early finish [Forward pass computations]

Answer 31

ES + Duration = EF

Question 32

Relationship between Late finish and Late start [Backward pass computations]

Answer 32

LF - duration = LS

Question 33

Resource Unconstrained Schedule

Answer 33

■ 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.

Question 34

Equation needed for float calculation

Answer 34

■ Total Float (TF) = LF - ES - dur ■ Start Float (SF) = LS - ES ■ Finish Float (FNF) = LF - EF

Question 35

Scope Management and Project Planning

Question 36

Definition of project charter

Answer 36

High level statement of what is to be done and the boundaries to a project

Question 37

Brief summary of procedure for project planning

Answer 37

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

Question 38

What is the first step in managing a project

Answer 38

Identify the work required to be undertaken to achieve the deliverable (the product)

Question 39

Rule of drawing activity nodes

Answer 39

Early start, , Early finish Float , Activity description/number, Duration Late start, , Late finish

Question 40

Rule of drawing activity constraints

Answer 40

■ 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].

Question 41

Precedence Diagram Method (PDM)

Answer 41

■ Estimate the duration of each activity ■ Initial take-off should be unconstrained ■ Establish relationships between activities

Question 42

Cons of Precedence Diagram Method (PDM)

Answer 42

■ 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!

Question 43

Work Breakdown Structures

Answer 43

■ Disaggregation: break down to finite components of work [Work Packages] ■ Integration: allocate resources ◦ Assign responsibility ◦ Schedule

Question 44

Category of Work Breakdown Structures

Answer 44

■ 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

Question 45

Definition of Work Package

Answer 45

■ 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

Question 46

Activity Take-off (Resource-load Activities)

Answer 46

■ Allocate resources to each activity ◦ Duration reflects assumed level of resource ◦ Introduce resource constraints ■ Types of Resources ◦ Personnel ◦ Equipment ◦ Space

Question 47

Fundamental process for Schedule

Answer 47

■ 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

Question 48

Cause of Unbalanced Bidding

Answer 48

■ 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