Estimating the Project
When the project design has been finalized, a complete and detailed cost estimate is prepared.The contractor uses this estimate for bidding and subsequent cost-control purposes. With cost-plus and construction management contracts, a similar estimate is compiled, essentially for the owner cost-control purposes during construction. The final estimate is based on a detailed quantity takeoff that is a compilation of the total amounts of elementary work classifications required. The costs of labor,construction equipment, and materials are computed on the basis of the work quantities involved.Subcontract amounts are obtained from bids submitted by subcontractors to the general contractor.
Taxes, overhead, and surety bonds are added as required. Of all the costs involved in the construction process, those of labor and construction equipment are the most difficult to estimate and control. Fundamentally, the estimating of such costs is based on production rates. A production rate can be expressed as hours of labor or equipment time required to accomplish a unit amount of a given work type. An example of this is the number of labor hours required to erect a ton of structural steel. Production rates also can be expressed as the number of units of a work type that can be done per unit of time, such as per hour. An example of such a production rate is the number of cubic yards of excavation that a power shovel can perform in one hour. For quick and convenient application, production rates frequently are converted to costs per unit of work. The source of production rates and unit costs is the company cost accounting system. When the cost estimate has been completed, the project control budget is prepared. This schedule of costs is the standard to which the actual costs of production are compared during field operations.discusses estimating project costs and preparing the project budget.