ESTIMATING IN CONSTRUCTION AND CONSULTANCY FIRMS

ESTIMATING IN CONSTRUCTION AND CONSULTANCY FIRMS

According to Jagboro (1998), the contractor’s Quantity Surveyor does work very much akin to that of a professional Quantity Surveyor although they have quite a different view point. A professional Quantity Surveyor prices the bill of quantities, which serves as a basis for tendering, often referred to as fair cost estimates which tends to represent the Quantity Surveyors fair price of the project to the client for which contractor’s tendering should be selected.

A contractor Quantity Surveyor on the other hand is referred to as an estimator and he uses his skill, experience and judgment in attempting to assess the extent of likely future costs for the purpose of submitting a tender. The professional Quantity Surveyor emphasizes the impartiality of his attitude to both his client and contractor whereas the contractor’s Quantity Surveyor must take his order from the employer, whose main objective must be to make money, however anxious he is to maintain a reputation for good workmanship (Jagboro 1998).

The method of pricing used by a professional Quantity Surveyor is similar to that of the estimator except that the Quantity Surveyor has the advantage of the fact that he prepared the documents and will be better acquainted with the problems that might affect the estimate by the time the tender document are ready.

TYPES OF CONSTRUCTION COST ESTIMATES

Marjuki (2006) classified the estimating types based on

1. How the estimate will be used.

2. The type, quality and amount of information available for preparing the estimate.

3. The range of accuracy desired in the estimate.

4. The calculation technique used to prepare the estimate.

5. The time chosen to produce the estimate.

6. The method or input and output (manual or computer) used in preparing the estimate.

7. The phase of project (feasibility, appropriation and construction) related to the estimate.

8. For whom the estimate is prepared (owner, contractor or insurance company). Clough (1986) classifies the construction estimating into two major types according to their functions which are:

1. Preliminary (Conceptual) Estimate
2. Detailed (Definitive) Estimates

1. PRELIMINARY ESTIMATES
Preliminary Estimate is also known as a top-down, order of magnitude, ballpark, feasibility, quickie, analogous, pre-design estimate, or preliminary estimate (Leng, 2005).

It is the first serious effort made at attempting to predict the cost of the project. A preliminary estimate is usually performed as part of project feasibility analysis at the beginning of the project. In this way, the estimate is made with limited information on project scope, and is usually made without detailed design and engineering data. The accuracy range is expected to be +50% to –30% (Al-Bani 1996, Leng 2005, Choon and Ali 2008).

Preliminary estimates are generally used by the owner of a project to determine the approximate cost of a project before making a final decision to construct it. The preparation of preliminary estimates requires a clear understanding of what an owner wants and a good “feel” for the probable costs (Heffner, 2004). Hendrickson (2000) stated that, “a preliminary estimate or conceptual estimate is based on the conceptual design of the facility at the state when the basic technologies for the design are known
According to Clough (1986), there are nine different methods of preparing preliminary estimate, they are:

1. Unit rate method
2. Superficial area method
3. Cube Method
4. Storey Enclosure Method
5. Approximate Estimating Method
6. Elemental Estimating Method
7. Cost Modelling Method
8. Cost planning
9. Parametric cost analysis

2. DETAILED ESTIMATES
A detailed estimate is also known as a bottom-up, fair cost, or bid estimate. It can also called “quantity takeoff” because needs to tabulated of all quantities for a project or portion of a project. These quantities are then multiplied by selected or developed unit costs, and the resulting sum represents the estimated direct cost of the facility. The addition of indirect costs, plant and equipment, office overhead, profit, escalation and contingency will develop the total estimate project cost (Leng, 2005, Humphreys, 2004). Detailed estimates are the most accurate estimate because the available information consists of working drawings, detailed specifications, and subcontractors and supplier price quotations. Detailed estimates include direct and indirect cost estimates of materials, labour, equipment, engineering, support staff, insurance, bonds, taxes, allowances, contingencies, and profit (Ahuja et al. 1994). It can be performed only when work items are identified and a takeoff of their quantities is possible.

A detailed estimate requires analysis of the method of construction to be used, the quantities of work, the production rates of resources, and the factors that affect each sub-item (Choon and Ali, 2008). The expected accuracy for a detailed or definitive estimate is within a range of +15% to –5%. Contingency requirements decrease since the cost of the work is the major variable left to the estimator’s judgment (Al-Bani, 1996).

Barrie and Paulson (1992) stated that after conceptual design has been approved and after most or all of the detail design work is complete, approximate estimates are generally supplemented by detailed estimates. The detailed estimate or definitive estimate is made when the scope of work is clearly defined and the detailed design is in progress so that the essential features of the facility are identifiable (Hendrickson 2000). According to Clough (1986), there are two ways of preparing detailed estimate, they are:
1. Unit quantity method
2. Total quantity method