Chapter 10- fundamentals of Estimating

Pricing Direct costs-materials

-Do quantity take-offs -Determine the quality and other characteristics of the items from specifications -Identify unit costs -Multiply total quantity of each material or product by its unit cost

Direct costs

Direct costs include the material, labor & equipment costs that can be billed to a specific task. Examples of direct costs include: windows and doors, foundation concrete, structural steel, light fixtures, subcontractors and other workers, scaffolding for the masons.

Pricing Direct costs- Equipment

Equipment includes those things that are mobile (such as a bulldozer) Equipment is either owned or rented by the contractor and the direct cost should be the same (realistic rental rates + operating costs) Equipment costs are added to the estimate

During Design

Estimating done by architect or his agent to make decisions about and adjustments t scope of work

During Feasibility

Estimating is done by the owner or his agent Estimate to determine projects goals and budget

Pricing Labor Cont'd

Estimator multiplies quantity × productivity for each task × labor rate/hour EXAMPLE: Quantity: 3840 SF of drywall (total units) Productivity: 2000 SF/day (crew of 2) Therefore: Total time = 1.92 days (say 2) Labor rate: assume $40/hr/worker Therefore: The cost to install 3840 SF of drywall is: $640/day × 2 (days) = $1280

Indirect Business costs

Indirect business costs are the costs of running a business and are not directly billable to a specific project but they must be paid for through the contractor's work Overhead is variable from contractor to contractor and their quantity of work but are typically accounted for as a fixed percentage markup.

Indirect project costs

Indirect project costs are labor, materials, equipment and administrative costs that are required to complete the work but have the following characteristics: They are not billable to a specific task They are directly linked to project schedule and their costs end when the project ends They typically occur at the job site and not at the contractor's home office Indirect project costs are also referred to as general conditions costs, general requirements costs, division 1 costs, or jobsite administrative costs.

Pricing Direct costs- Labor

Labor is tied to quantities so take-off must be complete before labor costs can be calculated Wage rates per worker are determined in one of three ways: Union labor rate Prevailing wage Open shop

Considerations Cont'd

Schedule -Reasonableness of owner's timeframe -Potential for bad weather Possibility of price increases Market Conditions -Links between local/national/global economy and costs -Level of competition -Availability of labor, materials, equipment

Considerations

Size and complexity of the project Quality of materials Locations of the project -Availability of labor and materials -cost variations in locations

GOAL OF ESTIMATE

The goal is to be complete and accurate so that it is as close as possible to the actual cost. The estimator will ask: Has everything been included? Are all take-offs accurate? Are all prices current and accurate? Has productivity been accurately estimated? Are discounts available for prompt payment? Are all contract terms accounted for Is there an understanding of risks? Is the price estimate competitive enough to win the job

Indirect Costs

The second category of costs is called indirect costs. Unlike direct costs, these expenses cannot be directly linked to a specific project task (such as pouring the foundation or facilitating meetings). There are two types of indirect costs: Indirect project costs - expenses that are directly linked to a specific project but not to a specific task Indirect business costs - contractor's expenses that are associated with running the business