Estimating the Project

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.

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