cve 4073/5073
DESCRIPTION
CVE 4073/5073. Construction Cost Estimating Class #2: Concept Estimating Prof. Ralph V. Locurcio, PE. Estimating defined…. - PowerPoint PPT PresentationTRANSCRIPT
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Construction Cost EstimatingClass #2: Concept Estimating
Prof. Ralph V. Locurcio, PE
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A complex process involving the collection of available information on the scope of a project, the expected resource consumption, and future changes in resource costs.
This information is synthesized in a visualization of the construction process and translated into an approximation of the final cost.
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Extensive knowledge of: Construction processes & methods Materials & methods Contracts & work practices Construction documents & details Background business factors Design & code requirements Verbal & written communications Good common sense & judgment
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KickoffMeeting
WorkPlan
EstablishStandards
UpdateDatabase
PrepareEstimate
DocumentEstimate
ReviewEstimate
Adjust Estimate?
SubmitBid
ProjectExecution
ProjectCompletion
Yes
No
Revise
Lessons Learned
Feedback to improve data base
Reality C
heck Yes
No
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Read the Plans, Specs & Contract
Conduct Site Visit
Decide Construction
MethodPrepare Schedule
Plan for SubcontractsPlan for EquipmentMaterial Take-Offs
Estimate costs
Determine contingency
Analyze Risk Factors
Finalize Bid
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Systematic analysis of: Project components Equipment needed Construction methods Temporary work items Support activities Externalities
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Conceptual Used for early decisions & feasibility Rough estimate using minimal data Relies heavily on past data Level of accuracy about 70%
Detailed Used for major decisions; i.e. bids & budgets Based on final design documents Level of accuracy up to 95%
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% Accuracy
% D
esig
n
0 25 50 90 100
100
90
60
30
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Based on prior experience: Weight check… weight of equipment Cost-capacity factor- ratio of Q/$ Comparative cost of structure – $/unit
Feasibility estimates Appropriations estimates Time & location adjustments
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Basis is cost per unit based on past experience with similar units. Compare structures of like construction, (e.g.
school: steel, concrete, quality, local labor, weather) Develop cost per unit, e.g.
A$/pupil = A Cost/A pupils Apply to new construction:
B Cost = B pupils x A$/pupil
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Schools: $/pupil Bridges: $/feet of span Stadium: $/seat Hospital: $/beds Offices: $/ft2
Warehouses: $/ft3
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Plant cost ratio… process plant ratiodifferentiates machine ft2 from admin ft2
Floor area… cost/ft2 … but Total horizontal area… all floors equal Finished floor area… $ based on type finish Cubic foot of volume… floor height varies
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Used for capital budgeting Expect 80-90% accuracy Based on historical data base Methods:
Panel… hist data on “typical” panels Bay… hist data on “typical” bays Plant component… equip cost + other TPC = ET/(1-PT)
Where ET=tot equip cost/(1-% all other cost items) ET = $$$ equip/(1-70%)
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Cost indexing Based on similar “group” of key items Compare “group” over time or location Final cost based on ratio x calculated cost:
Est Cost = T2/T1 x Calc Cost Est Cost = (T2/T1)(L2/L1) x Calc Cost
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“The future ain’t what it used to be”…Yogi Berra
Need to project costs to mid-point of the construction year for budgeting
Generally average past 3-5 years cost data & project forward
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Based on three primary factors:
A. Scope… quantitiesB. Constructability… methods
C. Risk… externalities
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Technology in project - complexity Milestone deadlines for work - timing Material & equipment - availability Staffing needed – skill & availability Contract terms – allocation of risk Amount of competition - markets
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Construction quality – skill required Allowable tolerances – productivity Complexity of design – learning curve Flexibility of methods – special terms
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Unspecified material or workmanship Differing site conditions Error in bidding Changes in cost over time Subcontractor error or failures Weather & environmental issues Strikes & labor issues Utilities & support issues
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1. Determine project characteristics:Scope, constructability, risk
2. Examine the project design & site3. Structure the estimate 4. Determine elements of cost 5. Calculate estimate
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Technical specifications Referenced standards Project drawings Testing and performance Special methods or procedures Physical elements & site characteristics Errors & omissions
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Structure often follows specification template
Ensure nothing left out Need a plan for completing the project Logical flow of resources & materials Productivity factors
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Labor- craft & skill resources; sub-contractors; union labor; wage rates; training; “effective” labor rates; productivity factors (weather, complexity, experience, management)
Material- price, shipping, availability, storage, relation to specifications
Equipment- purchase vs. lease, single use, down time, cost of maintenance
Capital- interest rates, payment flow, retainage Time- overhead costs, required completion date,
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Material take-off from plans1. Quantities of all construction materials2. Compare with specifications
Labor cost for construction or installation1. Effective labor rates2. Team composition & duration
Construction equipment schedule1. On hand vs. lease or purchase2. Time on job
Follow elements of cost1. Ensure all items are covered
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Calculate the estimated cost Solution in class
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Based on historical data Accuracy = +30% Used for planning purposes when no
design exists Used to check validity of detailed
estimate
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Assumes cost of equipment is dominant factor in plant cost
Estimate based on % of cost allocated to equipment relative to total cost of facility
Estimated cost is proportional to known cost
Must adjust for time & location
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Assume that the equipment portion of a chemical processing plant constructed in 2006 cost $1.2M and the total plant cost was $2.5M. Therefore the equipment portion of the total cost was 46%. Estimate the cost of a new plant with the same processes if the equipment for the new plant has been determined to cost $2.7M. Assume time and location factors are negligible in this case.
Solution:
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Assume that the equipment portion of a chemical processing plant constructed in 2006 cost $1.2M and the total plant cost was $2.5M. Therefore the equipment portion of the total cost was 46%. Estimate the cost of a new plant with the same process if the equipment for the new plant has been determined to cost $2.4M. Assume time and location factors are negligible in this case.
Solution: C2/E2 = C1/E1 … solve for C2
C2 = [C1/E1] x E2
C2 = [$2.5M/$1.2M] x $2.4MC2 = [2.08] x $2.7 = $5,625,000M
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Similar to comparison of $/sf unit measure Used when facility has differing ceiling
heights Calculate the $/cf of known facility Determine $/cf of known facility Calculate total cf of new facility Using known $/cf calculate cost of new
facility Adjust for time and location
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Determine the cost of a new warehouse which will have 3 distinct storage areas with differing ceiling heights. Area 1 = 12’; Area 2=14’ and Area 3 = 10’. The floor area of all three areas is 4000sf. A similar warehouse was constructed earlier this year for $2.4M. In that building the floor area was 8000sf and the ceiling height was a uniform 14’. Assume time and location factors are negligible in this case.
Solution:
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Determine the cost of a new warehouse which will have 3 distinct storage areas with differing ceiling heights. Area 1 = 12’; Area 2=14’ and Area 3 = 10’. The floor area of each area is 4000sf. A similar warehouse was constructed earlier this year for $2.4M. In that building the floor area was 8000sf and the ceiling height was a uniform 14’. Assume time and location factors are negligible in this case. Solution: Existing Building
A = 8000sf x 14’ = 112,000 cfCost/cf = $2,400,000 / 112,000 cf = $21.43/cfNew BuildingA1 = 4000sf x 12’ = 48,000 cf A2 = 4000sf x 14’ = 56,000 cfA3 = 4000sf x 10’ = 40,000 cfTotal = 144,000 cfCost = 144,000 cf x $21.43/cf = $3,085,714
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Prices “escalate” over time due to inflation Must adjust estimated cost to “mid-point” of
construction. Determine period of construction Determine start date of construction Determine mid-point of construction =
average cost Determine “escalation rate” = given index Multiply estimated cost by “escalation rate” Note: escalation is compounded, ie. increase is
cumulative over number of years of escalation
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Prices differ by region of the country Must consult a reliable index to determine
“relative” cost of construction between regions RS Means Cost Data or Engineering News
Record are examples Adjustment is a simple ratio multiplied times the
estimated construction cost. So… C2/C1 = L2/L1 X Estimated Construction Cost
and C2 = C1 x L2/L1
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You have been asked to prepare a conceptual cost estimate for the construction of a new university dormitory at Florida Tech to open in 2010. You have 2005 RS Means data that provides a cost of $30,000/bed for similar dormitories in the northeast of the US, and a construction period of 2 years. The Means data states that construction costs escalate at 10% per year in the southeast. If the dorm is to house 200 students at Florida Tech and the Means Cost Comparison Index between the northeast and southeast is 0.80, what is the estimated cost for the new library at Florida Tech at the mid-point of construction? Estimated Florida Tech cost:______________________
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1. $30,000 per bed x 200 beds = $6,000,000… in the northeast in
20052. In the southeast in 2005…
$6,000,000 x 0.80 = $4,800,0003. Construction start is…
Occupancy – 2 years = 2010 – 2 = 2008
4. Mid-point of construction is =2008 + 1 = 2009
5. Years of escalation…2009 – 2005 = 4 yrs
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6. Escalation: $4,800,000 x 1.10 = $5,280,000
(2005-06) $5,280,000 x 1.10 = $5,808,000
(2006-07) $5,808,000 x 1.10 = $6,388,800
(2007-08) $6,388,800 x 1.10 = $7,027,680
(2008-09)
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Therefore… the estimated cost of the new dormitory for Florida Tech at the mid-point of construction in 2009 is:
$7,027,680
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