Definition
Cost estimating in construction is a critical process that involves predicting the full extent of costs associated with a proposed construction project. This encompasses various elements such as labor, materials, capital, professional fees, equipment, and contingency reserves. The accuracy of cost estimates can significantly influence the feasibility and financial management of the project.
Examples
- Residential Building: When estimating the cost of a new residential building, a construction firm would consider factors including the price of building materials (bricks, cement, lumber), the local labor rates, equipment rental costs, and additional professional fees such as architectural and engineering services.
- Commercial Property: In estimating the costs for a commercial property like an office building, costs such as steel for frame construction, advanced HVAC systems, commercial-grade flooring, professional consulting fees, and the financing terms from lenders could be taken into account.
Frequently Asked Questions
Q1: What are the critical components of a construction cost estimate?
- The primary components include material costs, labor costs, equipment costs, overheads, contingency costs, and professional fees.
Q2: How is contingency typically estimated in a construction budget?
- Contingency is usually estimated as a percentage of the total project costs. It accounts for unforeseen expenses and variability in project cost elements, generally ranging from 5% to 20%.
Q3: What methods are used for cost estimating in construction?
- The methods include Analogous Estimating, Parametric Estimating, Bottom-Up Estimating, and the Three-Point Estimating technique.
Q4: How often should cost estimates be updated?
- Cost estimates should be updated periodically throughout the project lifecycle, especially at critical stages like design completion, pre-construction, and during change orders.
Related Terms
Budgeting: The process of creating a plan to spend your money, which helps in predicting future costs and managing financial resources effectively.
Project Management: The use of specific knowledge, skills, tools, and techniques to deliver something of value to people, focusing on the management and completion of projects.
Labor Costs: The total cost of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer.
Material Costs: The cost of all materials required for a project, including raw materials, parts, and partially finished goods.
Capital Cost: The total expenses for acquiring durable, long-term assets in a project, such as buildings or equipment.
Professional Fees: Charges for services offered by professionals like architects, engineers, and consultants involved in the construction project.
Online Resources
- RSMeans Online: A comprehensive source for construction cost data and estimating information.
- National Institute of Building Sciences: Provides guidance on cost management practices in the construction industry.
- Construction Estimating Institute: Offers training and certification in various estimating techniques and tools.
References
- Watson, Alan. “Estimating in Building Construction.” Pearson.
- Clark, Ian, and Champneys, Lydia. “Construction Cost Management: Learning from Case Studies.” Wiley-Blackwell.
Suggested Books for Further Studies
- “Oops Igreed!?” by John Lagnold - A comprehensive guide to avoiding common pitfalls in construction cost estimating.
- “Construction Cost Estimating for Project Control” by James Smith - Offers insights into systematic approaches for accurate cost estimating.
- “Cost Planning and Estimating for Facilities Maintenance” by Bothwell Miller - Focused on maintaining budget accuracy through effective estimating in maintenance projects.
