## What is an estimation of construction costs?

The determination of the cost of various items that would be required to carry out a construction project successfully is termed the estimation of construction costs. For preparing an estimate, the quantities of the materials are calculated from the construction drawings or blueprint design using formulas, and using these quantities, the construction cost estimating is done. The estimation process can be manual or it can be computed using construction estimating softwares such as RSmeans, STACK, and ProEst.

## Types of construction cost estimation

The three types of construction estimates are Design estimate, Bid estimate, and Control cost estimates.

### Design estimates

Design estimates are prepared during the pre-construction and planning phase when the detailed design is made for a new project. This method is used to analyze the feasibility of the different construction methods that can be employed in the project. The design estimates are classified as the preliminary estimate, detailed estimate, and engineer estimate.

#### Preliminary estimate

It is also called an approximate estimate. It is prepared by conducting preliminary studies of the construction materials, design, and methods to have an idea of the total cost required for the project. It is estimated by comparing the project with previously completed similar work.

#### Detailed estimate

It is an accurate estimating method, in which each quantity of material by considering its height, width, and length is calculated separately, which is then multiplied by its cost. By adding all the works, the total construction costs can be computed.

#### Engineer's estimate

An engineer's estimate is based on the designs and specifications acquired from bids received from building contractors.

### Bid estimate

The estimate that is submitted to the client to procure a contract is termed a bid estimate. This will be based on the building drawings and material take-offs. This estimate indicates the competitiveness of the contractor as the bid is generally won by the lowest cost bidder. The cost estimate should be very accurate to complete the project with profit to the contractor. Some contractors may have well-established cost estimating procedures that may not be possessed by other contractors, which can be an added advantage to the winning contractor. At times, subcontractors can submit bids to a general contractor to perform a particular segment of the project. This estimate includes the general construction costs, overhead costs, and the profit to the contractor.

### Control estimate

This estimate is used during the construction phase of the project. During construction, both the owner and the contractor must adhere to a cost-control baseline. A budget estimate must be set by the owner early enough to anticipate long-term financing of the facility. Because it is sufficiently specific to represent the project scope and is available long before the engineer's estimate, the detailed estimate is frequently utilized as the budget estimate. The planned cost must be updated on a regular basis as the project proceeds to reflect the projected cost of completion. Change orders issued by the owner, as well as unanticipated cost overruns, necessitate a revised projected cost.

## Levels of estimates

The above methods of estimates correspond to different levels of estimates

### Level 1

This level indicates the order of magnitude. This determines the feasibility of the project. It ranges from 0 to 2%.

### Level 2

This level indicates the intermediate estimate, which is also done to determine the feasibility of the project. It ranges from 1% to 15%.

### Level 3

This level indicates the preliminary estimate. This is done to provide an estimate of the proposal's cost to the approving authority. It ranges from 10% to 40%.

### Level 4

This level indicates the substantive estimate. This estimate is used to calculate the quantities and costs accounting for the finalized design plan and it ranges from 30% to 70%.

### Level 5

This indicates the definitive estimate and it is prepared from finished drawing plans and specifications. The typical technique is to evaluate the design package before itemizing it into line items with measurable quantities. It ranges from 50% to 100%.

## Advantages of construction cost estimation

• The ability to keep track of expenditures across all phases of a project is increased.
• Complete understanding of all construction estimates makes the bidding procedure for all future contracts much easier.
• Salary scales and productivity associated with manpower, as well as other expense-heavy elements ensure proper cost control and higher profitability.
• Periodically updated expenditure estimates enable to accurately evaluate cash flow, allowing to make smarter costing and finance decisions.

## Context and Applications

This topic is taught in the following fields of study:

• Bachelors of Technology in Civil Engineering
• Masters of Technology in Civil Engineering
• Masters of Technology in Construction Management

## Practice Problems

1. The set of rules which should be followed in construction is called-

1. Building byelaws
2. Schedule of rates
3. Accurate estimates
4. None of the above

Answer: Option a

Explanation: The byelaws are the government-formed rules that are to be followed to construct any structure and ensure safety.

2. The estimate which is submitted by the contractor to the client is termed as-

1. Bid estimate
2. Control estimate
3. Design estimate
4. All the above

Answer: Option a

Explanation: The cost estimate that is submitted by a contractor either to participate in a bid or to take up a contract is a bid estimate.

3. The earthwork excavation is measured by which of the following units?

1. Cubic meter
2. Square meter
3. Kilogram
4. Quintal

Answer: Option a

Explanation: The earthworks are usually measured in terms of volume. Here, only cubic meter is a representation of volume, while the square meter represents two-dimensional quantity, kilogram and quintal represents weight parameters.

4. The estimate which gives the approximate construction cost is termed as-

1. Preliminary estimate
2. Detailed estimate
3. Revised estimate
4. Supplementary estimate

Answer: Option a

Explanation: Preliminary estimate is made to decide on financial aspects, policies, and to offer the relevant sanctioning body an idea of the proposal's cost. Detailed estimate includes detailed cost estimation involving the quantities, the revised estimate is prepared when the given original estimate exceeds by a certain percentage and supplementary estimate is a freshly detailed estimate in addition to the original sanctioned estimate.

5. Which of the following documents are to be attached with a preliminary estimate?

1. Detailed report only
2. Site plan of the proposal only
3. Land acquisition details
4. All the above

Answer: Option d

Explanation: The calculations for the approximate estimate should be done with the help of all three data to provide a cost proposal to the client.

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