CONSTRUCTION COST ESTIMATION

 Imagine You’re Building a Cool Treehouse! You’re standing in your backyard, eyes on that perfect tree. The vision? A magical treehouse – a secret hideaway for adventures and daydreams. But wait! You’re not just thinking about fun – you’re also counting coins. Is it worth spending money on wood, nails, and secret trapdoors? That’s the cost side of the seesaw! Welcome to the world of the cost estimation.

Today in this blog, let’s dive into the fascinating world of construction estimating – where numbers dance, budgets sway, and projects take shape.

1. Overview of Construction Estimating: Imagine we’re architects with calculators. Our job? Accurately quantifying the costs to build a project. It’s like predicting how many bricks, beams, and bolts we’ll need. Here’s our toolbox:

   • Top-Down Estimating: Think of this as estimating by analogy. We peek at similar projects – like comparing cake recipes. It’s the least accurate but easiest way to calculate costs.
   • Parametric Estimating: Picture adjusting a recipe. If a 100MW Wind farm costs $150 million, a 200MW farm will cost double – $300 million. It’s more accurate with components adjustment as well but will takes more effort.
   • Bottom-Up Estimating: Imagine building from scratch. We calculate the cost of every activity – like pricing each ingredient for our cake. It’s the most accurate but also the most work.

2. Construction Costs: Now we’re dissecting our cake – layer by layer. Here’s the breakdown:

   • Direct Costs: These are the costs directly tied to specific tasks. For example:

     • Labour: Paying workers to mix cement or swing hammers.
     • Plant: Renting cranes, bulldozers, or concrete mixers.
     • Materials: Buying bricks, steel, glass – all the cake ingredients!
     • Sub-Contractors: Hiring specialists – like cake decorators or electricians.

   • Indirect Costs: These are the behind-the-scenes costs – not directly linked to a task. Examples:

     • Site Facilities: Imagine a cake kitchen – ovens, mixers, and chef hats.
     • Management Staff: Our cake bosses – project managers, supervisors.
     • Recurring or Non-Recurring: Some costs happen daily (like flour), others occasionally (like birthday candles).

3. Total Costs: Picture our cake – layers stacked, frosting smooth. It’s the sum of direct and indirect costs. Voilà – our budget!
4. Risk and Opportunity: Imagine we’re weather forecasters. We can’t predict exact raindrops, but we know it’ll drizzle. So, we add an umbrella – a buffer for uncertainty. It’s like icing on our cake.
5. Corporate Overheads: Think of this as our bakery’s rent, electricity bill, and Wi-Fi. It’s the cost of running our cake shop.
6. Profit: Imagine our cake shop shares profits with investors. We add a cherry on top – the mark-up. It’s the reward for our hard work.

So, whether it’s cake layers or construction estimates, our project unfolds. Let’s build – one brick, one byte, one wind turbine at a time!

Regarding to Estimating Process

1. Understanding the Scope:

   • Imagine we’re explorers decoding ancient scrolls. We dive into tender documents, design drawings, and project scope statements. It’s like deciphering clues – understanding what needs building.

2. Direct Costs:

   • Think of this as our cake recipe. We estimate the physical costs of constructing – the flour, eggs, and frosting. Here’s our recipe:

     • Work Breakdown Structure (WBS): Our cake layers! We break down the project into clear tasks – mixing, baking, decorating.
     • Delivery Methodology: How do we bake? Self-perform or hire a cake decorator (sub-contract)? We decide.
     • Pricing Model: Our secret ingredient – collating all data from our estimate.
     • Calculation: We measure flour (labour), eggs (plant), sugar (material), and sprinkles (sub-contract costs).

3. Indirect Costs:

   • These are the behind-the-scenes costs – the cake shop’s rent, chef hats, and ovens. Two types:

     • Recurring: Driven by project duration. If we need a chef (project engineer) throughout, extending the project increases costs.
     • Non-Recurring: Like calculating direct costs – individually summing labour, plant, material, and sub-contract.

4. Other Items:

   • Our spice rack:

     • Risk and Opportunity (R&O): We create a register – identifying, analyzing, and quantifying risks. It’s our umbrella for uncertainty.
     • Corporate Overheads: The cake shop’s Wi-Fi bill – not directly tied to a cake.
     • Profit Margin: Our cherry on top – reflects how keen we are to win and the risk we’re willing to take.
     • Estimate Reviews: Cake taste-testers – ensuring accuracy.
     • Cash-Flow Analysis: We don’t want a cash cake meltdown. Staying cash-positive is key.
     • Pricing Schedule: Our menu – part of the tender submission.

Estimating: Art and Science

Estimating isn’t just math; it’s an art. We turn requirements, drawings, and specs into a dollar amount – our cake’s price tag. So, let’s bake – one layer at a time!