Estimating

Question 1

What is direct cost?

Answer 1

Anything that has a discrete physical cost associated with the project

Question 2

What is indirect cost?

Answer 2

Anything that does not have a discrete physical cost associated with the project

Question 3

What are the 6 levels estimates?

Answer 3

1) Conceptual Estimate project (feasibility studies)
2) Estimate to Evaluate Alternate Design
3) Owner’s Engineer’s Estimate
4) Contractor’s Bid Estimate
5) Alternative Construction Methods Estimate
6) Change Orders or Claim Estimate

Question 4

What is conceptual estimate?

Answer 4

owner’s general scope of the project

↳ used for a broad estimate of the project

Question 5

What is estimate to evaluate alternate designs?

Answer 5

Estimates based on past projects with similar scopes

↳ uses unit prices and rough quantifications of units

Question 6

What is owner’s engineer’s estimate?

Answer 6

• The estimate is given after the design is 80 -90% completed
• Based on quantity takeoff
• Relays on past bid abstracts
• Will likely not consider construction methods

Question 7

What is contractor’s bid estimate?

Answer 7

• Most detailed out of all the estimates
• Based on the contractor’s Quantity takeoff (QTO)
• Will consider construction methods
• based on contractor’s detailed cost record

Question 8

What is alternative construction methods estimate?

Answer 8

• identify a cheaper way of getting the job done

- the goal is to maximize profit

Question 9

What is change orders or claim estimate?

Answer 9

Estimate for change orders

Question 10

What are the 7 cost categories?

Answer 10

• Labour (L)
• Permanent Materials (PM)
• Expendable Materials (EM)
• Subcontracts (S)
• Equipment Operating Expense (EOE)
• Repair and Service Labor (RL)
• Rental (R)
• Operated and Maintained (O&M rental)

Question 11

What level of risk does labour have and why?

Answer 11

Highest risk cost element

• Direct labour is the most volatile
• Highly productivity-related
• The most difficult cost to estimate and control during project performance

Question 12

What level of risk does permanent material have and why?

Answer 12

Low Risk

• Not productivity related
• Can be accurately determined and is therefore not volatile

Question 13

What level of risk does expendable material have and why?

Answer 13

Less risk than direct labour but still potentially high risk

• Not particularly productivity-related but can be very difficult to determine accurately and are thus always volatile to some extent
• In some projects can be highly volatile

Question 14

What level of risk does subcontracts have and why?

Answer 14

Low Risk if covered by performance bond

• Highly productivity-related from subcontractor’s point of view
• But, not productivity-related from prime contractor’s point of view provided that the subcontractor’s quote entered in the prime contractor’s bid estimate is secured by a 100% performance bond

Question 15

What level of risk does equipment operating expense have and why?

Answer 15

Not necessarily risky but can be if operating under harsh conditions

Highly related to the kind of work being performed and can be fairly volatile on equipment intensive jobs

Question 16

What level of risk does repair and service labour have and why?

Answer 16

Shares risk attributes of Direct Labor but normally will not be as high a cost

Question 17

What level of risk does rental have and why?

Answer 17

Could be risky?

• Highly dependent on the type of construction project and on the contractor’s business philosophy and equipment policy
• In-house rental
• Third party rental

Question 18

What level of risk does operated and maintained have and why?

Answer 18

Can be highly risky if no incentive
But not particularly risky if rental or owned

• With the exception of O&M rental this cost element is not particularly volatile
• O&M rental, however is highly productivity related and is just as volatile as direct labor

Question 19

What is permanent material? Give an example

Answer 19

Material that is in between the neat lines of the construction drawing. Usually very low risk since it is very clear on what the quantity is.

Ex. A foundation slab in the drawing. You know all the dimensions and therefore the amount can be determined.

Question 20

What is expendable material? Give an example

Answer 20

Material that falls outside the neat line of a constriction drawing.

Ex. Formwork. When pouring the form, the overflow would be considered expendable material.

Question 21

What costs are included in the EOE category of cost?

Answer 21

• Fuel, Oil, Grease (FOG)
• Tires
• Small repairs parts (spark plugs, oil filters etc)
• 3rd party overhaul

Question 22

List all different options for supplying equipment to your project

Answer 22

• Rental
• O&M (Operated and Maintained)
• In house rental from another division
• Joint venture with another company
• Buy and Sell

Question 23

What 3 items are generally included in Markup?

Answer 23

• Risk Coverage
• Home office
• Profit

Question 24

Provide a sketch detailing the different types of contingency that management needs to consider.

Answer 24

Contingency

Identified => productivity hedge, soft subs, special risk
unidentified => covered in markup

Question 24

In a schedule of bid-item bid identify the costs that when added together make up the total amount to be distributed

Answer 24

• Indirect: Job Office, Safety, Time/Non-time Related expenses, Insurances, Taxes • Direct cost: materials, direct labour, subcontractor costs • Escalations: Price of supplies and materials increasing • Markup: % of the total cost, % of the labour, and consideration of the total horizontal distribution • Contingency: Money that might need to be readjusted or set aside for potential accidents. Can be separated into identified/unidentified • Interest: When borrowing money, the money will have a fee associated with it that the owner will have to pay

Question 25

What guidelines would you follow in distributing your fixed costs + markup to the individual big items of a schedule-of-bid-items bid?

Question 26

List the 5 categories of indirect costs and provide an example for each.

Answer 26

* Salaried Payroll: Management, engineering, supervision * Time-related overhead: Warehouse operation, supplies, utility bills * Non-time-related overhead: office furniture, office equipment * Insurance and taxes: explains its self * Construction plants in-and-out: Fencing, surfacing, furnish buildings

Question 27

What two contract provisions do you need to read and understand before conducting a quantity takeoff? Explain the significance of each of these provisions?

Question 28

List the 5 takeoffs that could be required for a particular bid item.

Answer 28

* Work quantity * Pay quantity * Permanent material * Expendable material * Subcontractors

Question 29

List the different quantity takeoffs that you would complete for the structural concrete bid item for a bridge pier.