ESTIMATING

Estimating Technique and

Type of Construction
Estimate

Prepared by:
Ar. Maynard M. Muhi,uap,mscm

ARCH 30293 MODULE - 2

BUILDING TECHNOLOGY 4
Learning Outcome:
• Define typical cost estimating methods
that are used within the Construction
Industry.

• Knowledge in construction cost estimating

process.
What is an estimate or estimation in
construction industry?
Estimate is a rough calculation on
quantities of various works & their
expenditure, done by the experts of the
relevant field before the execution of a
project. Accuracy of an estimate depends
on the experience, ability and judgement
power of the estimator.
Anyone who willing to engage them on
constructing something, they’ll surely
bother about the quality & money/cost. To
feel free from them a solution called
“estimate / estimation” was derived…!
What is an estimate or estimation in
construction industry?
An estimator should be very careful of
the quantity takeoff, using the given
documents such as drawings,
specifications and other documents
regarding the project. Other than these,
every estimate should prepare with the
consideration of other 2 factors, which
influence a project namely, direct &
indirect cost. (Direct cost – cost of
materials, equipment, labour &
subcontracted cost, Indirect cost –
overheads, contingency).
 DIRECT COST
3. Labor

1. Materials

4. Sub-contractor

2. Equipment
INDIRECT COST
1. Overheads
Overhead costs are those that are not related
directly to the production activity and are
therefore considered indirect costs that must
be paid even if there is no production.

EXAMPLES: include rent payable,

utilities payable, insurance payable,
and salaries payable to office staff,
office supplies, etc.
Overhead is categorized into two:
a. Indirect cost
• Office Expenses • Miscellaneous Indirect
➢ Office Rental Overhead Cost
➢ Office Supplies ➢ Travel Expenses
➢ Utilities ➢ Legal
➢ Insurances ➢ Marketing and
➢ Office Equipment Advertising
➢ Phones ➢ Professional
➢ Furniture • Depreciation Cost
➢ Taxes ➢ Office Equipment
➢ Construction
• Staff Salaries Equipment
➢ Executives
➢ Purchasers
➢ Estimator
➢ Staffs
Overhead is categorized into two:
b. Direct cost
• Project Specific Salaries
➢Reimbursable expenses
Ex. Travel or per diem
• Temporary Office Facilities
• Other Temporary Enclosure
• Temporary Utilities
• Sanitation Facilities
• Drinking Water
INDIRECT COST
2. Contingency
A construction contingency refers to a
designated amount of money within a
construction budget that you can use to pay for
unexpected costs that may occur while
completing the project.

•Funding loss
•Personnel costs
•Project changes
•Resource management
•Supply issues
•Weather delays
 Estimating Method

Estimating methods require different amounts of time to complete and produce different
levels of accuracy for the estimate. The relationship between the time to complete the
estimate and the accuracy of the estimate.
TYPE OF ESTIMATE
1. Detailed Estimate

The detailed estimate includes

determination of the quantities
and costs of everything that is
required to complete the project.
This includes materials, labor,
equipment, insurance, bonds, and
overhead, as well as an estimate
of the profit.
2. Assembly Estimating
In assembly estimating,
rather than bidding each of
the individual components of
the project, the estimator
bids the components in
groups known as assemblies.
The components of an
assembly may be limited to a
single trade or may be
installed by many different
trades.
 3. Parametric Estimates
Parametric estimates use equations that
express the statistical relationship
between building parameters and the
cost of the building. The building
parameters used in the equation may
include the gross square footage, number
of floors, length of perimeter, percentage
The three requirements of the building that is common space,
are: and so forth. Parametric estimating is
• Sufficient Historical Data
useful for preparing conceptual estimates
• Measurable Parameters
• Scalability based on assumptions of key building
parameters or estimates based upon
early designs.
 4. Square Foot/Meter Estimates

Square-foot estimates are

prepared by multiplying the square
footage/meter of a building by a
cost per square foot/meter.

Then adjusting the price to compensate for

differences in the building heights, length of
the building perimeters, and other building
components.
5. Model Estimating
Model estimating uses
computer models to prepare
an estimate based on a few
questions answered by the
estimator. Model estimating
is like assembly estimating,
but it requires less input from
the estimator.
6. Project Comparison Estimates
Project comparison estimates are
prepared by comparing the cost of a
proposed project to a completed
project. When preparing an estimate
using this method, the estimator starts
with the costs of comparable project
and then makes adjustments for
differences in the project. An estimate
for the buildings in an apartment
project may be prepared from a
project built using the same plans
during the previous year in a nearby
city.
CONSTRUCTION COST
ESTIMATING PROCESS

PHASE 1
In the first phase of the construction estimating
process, the estimator must work with the client
and architect or design team to gain an
understanding of the scope of the project.

1. SITE VISIT

the estimator will probably

want to visit the actual
building site to visualize the
project as well as begin
accounting for logistical
concerns such as material
storage, access, and
shipping concerns.
 2. ENVIRONMENTAL CONSIDERATION
➢ estimators may also begin to
assess any environmental
considerations that may
have an impact on the cost
or length of completion time
for the project.
➢ include the presence of any
protected habitats or species,
environmental regulatory
requirements including federal,
state, and local ordinances, and
even the local weather, such as large
amounts of seasonal rain or snow.
3. LOGISTIC
➢requirements for storage and
material transportation.
CONSTRUCTION COST
ESTIMATING PROCESS

PHASE 2
The second phase of the estimation process is where
the construction cost estimator begins to dive into the
nuts and bolts of the project, both literally and
figuratively, to create a detailed cost analysis.

The second phase revolves around

creating a comprehensive list of all of the
materials required for the construction
project and determining a projected
timeline for project completion. The
takeoff is a crucial element to the
estimation process that requires compiling
massive amounts of information,
performing complex mathematical
equations, and carefully weighing many
factors that could impact the necessary
materials for a project.
To create a takeoff, a construction cost estimator
must carefully examine the blueprints or schematics
for a project to:
• Determine all the materials needed to complete the
project
• Determine the material required for cleaning up the job
site after project completion
• Determine and take note of key information that will
impact the overall cost
• Determine the cost of material which requires working
jointly with vendors to get quotes and to anticipate any
future fluctuations in material cost
• include accounting for possible delays resulting from
inclement weather, manufacturing or shipping delays,
holidays and other mandatory days off, and regulatory
or environmental considerations.
CONSTRUCTION COST
ESTIMATING PROCESS

PHASE 3
During the third phase of the construction
estimating process, the estimator will seek to
determine the labor requirements and costs of
the project.
• work closely with construction managers and
subcontractors to determine precisely how many
workers will be required.
• to work with a union representative, which may
introduce additional labor considerations.
• calculating labor requirements estimators must
consider the size and scope of the project, the
intended timeframe for project completion,
• and the necessity and availability of specialized
or skilled labor needed to complete the project.
✓Mark Up
During the third phase, the estimator may apply
any markups to the estimate to ensure that a
profitable bid has been submitted. Some
estimators may apply markups throughout the
estimation process, but frequently a
comprehensive cost analysis is attained and then
markups are applied. Markups are an essential
part of the estimation process because they
ensure that the bid remains profitable for the
contractor.

Example: if your construction costs

are P5,000, but you charge the client
P5,500, your markup would be P500,
or 10% (P500/P5,000 =.10).
CONSTRUCTION COST
ESTIMATING PROCESS

PHASE 4
During the fourth phase of the construction cost
estimating process the estimator will present
the detailed estimate and cost analysis of the
project to the client, architect, and project
managers.
Clients often take multiple bids from different
contractors, and then compare the different estimates
with an eye towards the cost, the comprehensiveness of
the estimate, the quality of the contractor's past work,
the timeline for completion, and the contractor’s history
of completing projects on time. The level of detail and
accuracy in an estimate can mean the difference between
securing a bid and being rejected. Other factors can play a
role in the selection process as well.
Estimating Techniques
Estimates are required, to varying degrees
of accuracy, at all stages of the project life
cycle. The estimate is a crucial part of the
project process, and the key to producing a
good estimate, is quality of information.
Various estimating techniques can be used
but here we have concentrated on a
summary of 12 basic rules which should be
followed when estimating your project:
Estimating Techniques
1.Remember to estimate
labour, materials,
equipment and financial
resources.
2.Assume that labour
resources will only be
productive for 80 percent of
their time.
3.Labour resources working
on multiple projects take
longer to complete tasks
because of time lost
switching between them.
4.People are generally
optimistic and often
underestimate how long
tasks will take.
5. Make use of other people’s experience and
your own.
6. Obtain an expert view.
7. Include management time in any estimate.
8. Always build in contingency for problem
solving, meetings and other unexpected
events.
9. Cost each task in the work breakdown
structure to arrive at a total, rather than
trying to cost the project as whole.
10. Agree a tolerance with your customer for
additional work that is not yet defined.
11. Communicate any assumptions, exclusions
or constraints you have to your customer.
12. Provide regular budget statements to your
customer, copying your team, so that they
are always aware of the situation.
 QUANTITY TAKE-OFF – (QTO)

a detailed measurement of materials

and labor needed to complete a construction
project.

MATERIAL TAKE-OFF – (MTO)

is a term used in engineering and construction and
refers to a list of materials with quantities and
types that needs to purchase to complete the
project.
The way that materials are assigned a quantity in a
material takeoff depends on the type of material. In
general, there are four types of quantities that are
regularly seen in a material takeoff.
Count
Materials that are prefabricated. These include things like light fixtures,
hinges, windows, or doors. Each associated product will have a description
to ensure that the exact model needed for the project is ordered, along
with a number indicating how many of that particular material to order.

Length
This is most commonly seen for materials like lumber, steel piping,
molding, or ducting. Each material will have detailed length and width
measurements, with some material takeoffs providing details like the
total weight of the required material for shipping considerations.
Volume
This is useful for materials that are liquid, such as
concrete or asphalt. In order to determine the
volume of a required material the person preparing
the estimate will need to be familiar with relevant
calculations for determining volume.

Area
The area is used for such things as flooring, roofing, or
tile, and is often provided in the form of square feet or
Square meter.
ESTIMATING METHODS
Estimating Guide for Architects by Ar. F. Hong,Fuap
 1. ESTIMATING BY UNIT COST METHOD
The facility to be designed or constructed is defined in
terms of its capacity to serve.
In some cases, using agency which built the same types of
structure many times has well develop historical file on
cost and use requirements.

cost per parking space

cost per bed

cost per bed cost per student population

2. ESTIMATING BY SQUARE METER METHOD
Square meter costs are found by
multiplying the area times a cost.
The cost will be usually found from the
historical data of the past projects. This
method is commonly used by Architects.

Example:
45 sq.m. X 1.0 = 45 x 35,000/sq.m. =
P 1,575,000.00

a. 45 s.m. = Floor Area

b. 1.0 = EEBA see Fig. Below
c. P35,000 (Elegant) = range per s.m.
Space factor to be
used in Estimating by
Area: to arrive at an
accurate cost per
meter of a building
spaces and its
appendages should
be converted into
their equivalent
values in relation to
the predominant
enclosed space.
UAP presents the equivalent enclosed
building area (EEBA)
3. ESTIMATING BY CUBIC METER METHOD
Cubic meter method is an approach is similar to the
square meter procedure except that the cubage provides
the basis cost. This method is normally used in
earthwork, civil construction and air-conditioning.

Example:
Excavatio n for column footing:

1.00 m. X 1.00 m. X 1.50 m = 1.50

cu.m. 1.50 cu.m. X 8 = 12 cu.m.

12 cu.m. X 275/cu.m. = P 3,300.00

 4. ESTIMATING BY PARAMETRIC METHOD
This method involved the major scope of work of the
building and apply the cost to each area /work based
upon the historical data or similar to the past projects.
Example:
Estimate of an Office Building : High Rise (P 20,000 / sq.m.)

P 500 P 400

P 3,000
P 7,200 Architectural-36%
P 3,000 Structural - 29.5%
Electrical - 15%
Mechanical - 15%
P 5,900
Site - 2.5%
Others 2.0%
 5. ESTIMATING BY MODULAR METHOD
This method involved the repetitions of projects such
as housing units, apartments etc.. The accurate cost
for one unit and multiply by the total number of units .

Example:
100 units of housing @ 800,000 / house = P 80,000,000.00
How to estimate building costs
more accurately
Inaccurate
estimating is a
very common
underlying cause
of cost overruns in
construction.
Construction project cost estimation involves
projecting the costs you’ll incur during a
particular job. This is a key part of the bidding
process as it helps you determine not only an
appropriate offer but also how the project in
question would affect your cash flow.

It’s not uncommon for a construction company’s

future to hinge on the accuracy of its
estimates. According to an Intuit survey, 25% of
construction firms describe themselves as being
just two to three inaccurate estimates away
from bankruptcy.
 Here are some tips on how to
estimate building costs with
Construction
Project Resources greater accuracy.
• Sub contractor 1. TRACK YOUR RESOURCES
• Tools & Equipment
• Materials Determining when you have the
• Products resources necessary for a project’s
• Facilities successful completion is a key part
• Human Resources of estimating. Construction
• Finance
resource management
• Construction
Plants software makes it much easier to
receive an accurate answer in this
regard.
2. GET EXPERT INSIGHT

Cost estimating is one area of

construction best left to those
with plenty of experience. It
takes an expert to understand
the various things that can go
wrong and cause cost overruns
on a job site.
This expertise will help you
create a more accurate estimate
that protects your financial
interests.
3. BE METICULOUS IN
CALCULATING LABOR COSTS

Labor is often one of the most

difficult aspects of any project to
price. You need to consider not
just your workers’ hourly wages
but also any benefits they receive
along with things like time theft
which, left unchecked, can really
eat into your budget.
4. KNOW HOW TO ESTIMATE
CONSTRUCTION MATERIALS

When estimating construction

material costs, you need to get
the most accurate unit figures
possible. Don’t rely on what
you think costs might be for
quotes requiring more detail. Get
your inputs right by receiving
quotes for your orders or through
whatever other means you have
of getting market prices.
5. TRACK SPENDING
One way to ensure more accurate
estimates in the future is to
carefully track your spending on
every project. You can then use this
data to inform your estimates on
similar projects in the future.

This is imperative when using the

more involved methods of
estimating, such as production
function and empirical cost
inference.
6. KNOW YOUR HOURLY
RATES FOR SPECIALTY WORK
There’s little sense in being rough
with your labor cost estimates since
you should have direct knowledge of
them.

Once again, include not just their

hourly wages but also any benefits
(including union dues) in your
calculations.
 Factors
include schedule, 7. IDENTIFY KEY RISK
location, safety FACTORS
concerns, the use
of subcontractors, Every project has distinct risk
and material
factors you can usually see
supply availability,
and financial coming from a mile away.
aspects such as When creating your estimate,
liquidated be sure to include these risk
damages,
performance
factors along with the costs
bonding, and the you’d likely incur if things
financial strength didn’t go your way
of the project
owner.
 8 Common Construction
Estimating Mistakes
Estimating is one of the most difficult jobs in
construction. It is also one of the most
important. Profits are typically won or lost
based on how accurate your estimates are and
how closely they match up to your final
project costs.
 1. Not Conducting a Site Visit
Most bidding opportunities provide prospective bidders with a chance to attend a pre-
bid meeting and visit the jobsite. Often, these are mandatory in order to submit a bid
and with good reason. No two jobsite are identical and unknown site conditions can
cause unexpected, and costly, issues when construction gets underway.

When conducting a site visit you’ll want to

take measurements, inspect the
topography, and take some soil bore
samples if that hasn’t already been done.
You also want to look at road access and
traffic to the site, determine how much
space there is for staging, equipment and
materials delivery and storage, and what
environmental protections will be needed
during construction.
1. Not Conducting a Site Visit
Most bidding opportunities
provide prospective bidders with
a chance to attend a pre-bid
meeting and visit the jobsite.
Often, these are mandatory to
submit a bid and with good
reason. No two jobsite are
identical and unknown site
conditions can cause unexpected,
and costly, issues when
construction gets underway.
2. Inaccurate Takeoffs
Your takeoffs lay the groundwork for
your estimates. If they’re incomplete or
incorrect it can really screw up your
estimates. Accurate takeoffs help you
determine the exact quantities needed
for all your materials and supplies.
They are also required to determine
your labor and equipment needs. If you
miss items during takeoff or don’t get
accurate measurements, you’ll either
overestimate the project and not win
the bid or you’ll underestimate and risk
winning a project that won’t be
profitable.
3. Labor Costs
Labor costs are probably the
hardest item to nail down
accurately when it comes to your
estimate. Construction business
owners say “labor costs are the
hardest to estimate and are ranked
as the most expensive project cost.”
There are several variables in play
when it comes to estimating labor
costs including the number of
available workers for the project,
their experience level, rate of pay,
and productivity.
4. Materials & Supplies Costs
Building materials and supplies are
another big cost for construction
projects and rank high in being
hard to accurately estimate. Prices
for materials can fluctuate
dramatically from the time you
start an estimate to the time that
construction commences. Demand
for materials is high and
uncertainty over tariffs and their
impact on prices are making it
even harder to get estimates right.
5. Failing to Assess
Risks & Creating
Contingencies
Every construction project
comes with risks. Completing a
risk assessment should be part
of your estimating process. For
one, it helps in your bid/no-bid
decision-making. A good
estimator can identify a project
that is too risky and pass on
submitting a bid. It also helps to
determine how much to
estimate for contingencies.
6. Making Uneducated Guesses

Don’t gamble on your bids

by making uninformed or
uneducated guesses in your
estimating. Tracking job
costs on every project is a
great way to ensure your
estimates, and ultimately
your bids, are as accurate
as possible.
7. Not Reviewing Your
Work
Everyone makes mistakes. Estimators are no
exception. Small estimating errors or omissions
might not make much of an impact but big ones
like omitting scope items, inaccurate
measurement, or using the wrong units of
measure can spell trouble. Take the time to
carefully review your work or have another
person on your estimating team review your
estimates. Double-check your measurements
are accurate, and your math is correct for all
your costs.
8. Not Reviewing
Subcontractor Estimates
If you’re a general
contractor, chances are
you are going to have to
subcontract out some of
the work to trade
contractors. Be sure to
review their bid
estimates and proposals
thoroughly.
THE FIVE-LEVEL SYSTEM OF ESTIMATE
ACCURACY
The accuracy of cost estimates is pegged upon the well-defined
project plans in the design phases. The American Society of
Professional Estimators subdivided the system into a five-level
system that improves over time and is very reliable. The five-level
system is subdivided as follows:-

LEVEL 1: ORDER OF MAGNITUDE ESTIMATE

This is made before the project takes off and is only used to
determine a project’s feasibility.
LEVEL 2: SCHEMATIC DESIGN ESTIMATE
This is the estimate produced in line with the schematic design.
LEVEL 3: DESIGN DEVELOPMENT ESTIMATE
This is the estimate in the design development phase
LEVEL 4: CONSTRUCTION DOCUMENT ESTIMATE
This is the estimate that is taken off from construction specifications
and drawings.
LEVEL 5: BID ESTIMATE
This is the estimate based on the construction documents by the
prices offered to the client.
TOOLS TO HELP YOU ESTIMATE

Construction estimators use different tools

in estimation. Old school estimators
use spreadsheet software like Excel.
However, new construction estimating
software is now available in the market
that leaps into the future.
Construction estimating software
streamlines the estimation process in both
simple and complex projects. There is a
narrow margin of human error, and good
usability gives an analysis on cost and
reporting.
COST ESTIMATING GLOSSARY
There are essential terms and concepts in cost
estimation. However, there is a large degree of overlap
between some of them.
➢ Takeoff: This is developed during the
project preconstruction stage and measures the
materials and labor necessary for project completion.
➢ Person-hour: This is a unit of work done by a person
in an hour
➢ Labor rate: This is the amount of money paid to
skilled artisans in an hour.
➢ Equipment costs: This refers to buying, renting
equipment, or running costs necessary in a project.
➢ Indirect costs: These are costs not directly linked to
construction work. They include transport,
administrative, and other more minor expenses.
➢ Profits: This is the margin the contractor adds to the
project cost as the profit.
➢ Escalation: This refers to the natural inflation costs with
time.
➢ Bonds: This is a guarantee of delivery. If the contractor
fails to deliver the project as per the contract terms, the
owner is entitled to compensation. This compensation is
as stipulated by the performance bond.
➢ Contingencies: This is a predetermined sum of money
added to the cost estimate to cater for unforeseeable
circumstances such as adverse weather conditions or
material wastage.
➢ Capital costs: These are the initial costs for establishing
a project, such as land acquisition, feasibility studies,
design phase, and construction costs on materials,
labor, and equipment.
➢ Operations and maintenance: These are costs for the
day-to-day operations such as land rent, salaries,
renovation costs, and maintenance costs.
CONCLUSION

The road to accurate estimation takes

time and patience and is vital in any
project management role. First, one
needs to know the basics of estimating
and investing in the proper resources
as it determines a business’s success or
failure. Accurate estimation inhibits the
likelihood of catastrophic financial
outcomes in a project.
THANK YOU