Construction Cost Estimating Class #2: The Estimating Process Prof. Ralph V. Locurcio, PE

 Decision to bid  Form the estimating team  Estimate work plan  Type of estimate  Estimating Procedures  Documentation  Risk & contingency analysis  Review & check the estimate  Finalize the estimate

 Type of estimate required  Deliverables by subcontractors  Budget for the estimate  Staffing  Schedule  Methodology  Controls & reviews  Presentation format & production

 Conceptual estimate – for project planning  Decision based on units  70% Accurate  Adjustments for time & location  Detailed estimate – for bidding  Material take-off  Equipment & cycle time  Labor & productivity  Admin+overhead+logistics+profit  95% Accurate = class standard

 Read the plans, specs & contract  Conduct a site investigation  Decide on construction method  Prepare schedule  Material quantity takeoffs  Plan for equipment  Plan for subcontracts  Estimate costs of labor & materials  Assess risks  Determine contingency

 Industry standard for estimating  Easy to format per bid instructions  May be used as template for future bids  Avoids mistakes in calculations  Saves time  Summarizes costs  Provides analytical tool  Standard for homework in this class

 Physical characteristics  Sub-surface conditions  Site logistics for construction layout  Condition of roads & bridges  Storage space for lay-down  Security requirements  Operational requirements

 Contract terms & conditions  Payment & penalties  Scope and quantities  Complexity of construction  Completeness of plans  Quality of materials required

 Basic approach & teaming  Work breakdown structure  Skills of work crews  Decision on work to be subcontracted  Timing of individual activities  Phasing of crews & subs on site  Procurement of equipment  Flow of materials & laydown  Cash flow projection

 Based on contract provisions  Sequence of work  Operational constraints  Site constraints  Weather & safety factors  Lead time for materials  Availability of subcontractors

 Study plans & specs  Bid instructions, format & alternates  Systematic breakdown of units  Follow sequence of construction  Categorize materials & labor  Check for duplicates & omissions  Document all work  Review & check for errors

 Materials, labor, equipment  Subcontractor bids  Contact suppliers  Market factors apply  Establish and update cost data base

 Mobilization  Field office  Insurance  Bonds  Taxes & permits  Cleanup  Demobilization

 Complexity of plans & specs  Terms of contract & penalties  Experience with owner  Timing of project  Market factors for labor & materials  Weather & safety  Other uncertainties effecting execution  Probability of occurrence of each

 Percentage of base estimate  Determine high cost risk factors  Expected net risk based on probability  Aggregate total project risk  Add cost to cover risk

 Slides are on my web site  My web site:

 Contact info for me… Prof. Ralph Locurcio, PE LINK – Room 233 Office Hours: Mon + Wed + Fri Web: