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CCEC-Lec06-Overhead-Ch. 6 PDF

The document discusses overhead and contingencies in building construction cost estimation. It defines two types of overhead: home office overhead which includes general company expenses that cannot be assigned to a specific project; and job overhead which refers to expenses associated with executing a particular project, such as temporary facilities and site staff salaries. The document provides examples of cost items that fall under each overhead category and how to allocate home office overhead costs. It also discusses the importance of project scheduling in determining job overhead costs and provides guidance on rational contingency budgeting to account for unknown costs rather than poor estimating.

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Rafia Abid
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104 views15 pages

CCEC-Lec06-Overhead-Ch. 6 PDF

The document discusses overhead and contingencies in building construction cost estimation. It defines two types of overhead: home office overhead which includes general company expenses that cannot be assigned to a specific project; and job overhead which refers to expenses associated with executing a particular project, such as temporary facilities and site staff salaries. The document provides examples of cost items that fall under each overhead category and how to allocate home office overhead costs. It also discusses the importance of project scheduling in determining job overhead costs and provides guidance on rational contingency budgeting to account for unknown costs rather than poor estimating.

Uploaded by

Rafia Abid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Estimating in Building

Construction
Chapter 6 Overhead and Contingencies
Overhead

 Home Office Overhead


 Items that cannot be readily charged to
any one project, but represent the cost of
operating the construction company
 Job Overhead Cost
 Overhead expenses resulting in executing a
specific project

2
Home Office Overhead
 Also known as:
 General overhead
 Indirect overhead cost

3
Home Office Overhead
 Rent  Salaries
 Office utilities  Executives
 Office supplies  Accountants
 Estimators
 Postage
 Purchasing dept.
 Insurance on office  Store keepers
 Taxes on office  Secretaries
 Office equipment

4
Home Office Overhead
 Advertizing  Club and association
 Books & magazines dues
 Legal fees  Depreciation
 Office equipment
 Design costs
 Donations
 See Fig 6.1 Home
 Travel
office overhead and
 Vehicles for office cost allocation
staff

5
Example 6.1
 Home Office Cost Allocation:
Anticipated home office costs for fiscal year
= $690,580
Anticipated sales volume for fiscal year
= $9,500,000
Home office cost allocation
= 690,580/9,500,00 = 7.3%

6
Job Overhead
 Also known as:
 Project overhead
 Direct overhead
 Indirect field costs

7
Job Overhead Includes
 Salaries  Temporary office
 Superintendent  Rent
 Assistant  Utilities
superintendent  Temporary
 Timekeeper  Buildings
 Foremen  Barricades (& lights)
 Security  Enclosures (fence,
 See Fig 6.2 Field temporary
staff plan and doors/windows,
estimate protection for
equipment)

8
Job Overhead Includes
 Temporary utilities  Photographs
 Power  Surveys
 Lights  Cleanup
 Heat
 Winter conditions
 Phone
 Water
 Protection of
property
 Sanitary facilities
 Toilets

9
Schedule
 Needed to determine job overhead
 See Fig 6.3 Office Building
 Process
 List all activities
 Assign durations
 Sequence the activities
 Calculate start and finish dates
 See Fig. 6.4 Activity Lest

10
Precedence Diagram
Figure 6.5

11
Contingencies
 For items overlooked or left out
 A sum of money or percentage
 Often used as an excuse for poor
estimating practices
 Rational use for contingencies is for
price escalation

12
Checklist
 Estimate of Labor
 Number of weeks on the project x Weekly
rate
 Persons to be relocated x cost per person
 Quantity required x productivity rate
 Estimate of Material
 Quantity required x unit cost
 Estimate of Equipment
 Duration required x Monthly cost

13
Read Chapter 1, 9
 Book
 Aggarwal, A. and Upadhyay, A.K. (2008).
Civil Estimating, Costing and Valuation.
S.K.Kataria & Sons. New Delhi.

14
Thank You

15

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