Construction Estimating

CEM 451/651
CEE 472/672
Introduction
 Estimating Work
Experience
 Construction Estimating
CEM 451/651
CEE 472/672
Syllabus & Schedule
 Construction Estimating
CEM 451_651/CEE 472_672
Introduction & Bid Documents
Construction Estimating
 Introduction
◦ Definition of Estimating
◦ Purpose of Estimating
◦ Types of Estimates
◦ Steps for Preparing an Estimate
◦ Cost Estimate Classifications
◦ Types of Bids
◦ Estimating Formats
Definition of Estimating
 To determine an approximate cost or time to
complete a project
 Construction estimating

◦ Construction cost estimating

 Materials, labor, and equipment
◦ Construction time estimating
 Time to complete each work activity and project
Purpose of Estimating
 To determine the probable real costs to
build a project
◦ Direct cost
◦ Indirect cost
◦ Contingency
◦ Profit
 80/20 Rule – Direct Cost 80% & Indirect 20%
 To determine the probable real time to build
a project
◦ Individual work item, total time for a project
Construction Project
Timeline
 Project Phases
◦ Sponsor’s study
◦ Preliminary engineering design
◦ Detailed engineering design
◦ Contract procurement
◦ Construction
 Estimating is done in each phases of the
project
Life-Cycle of Construction
Projects

Planning & Preliminary Designer Contractor Operation and Maintenance

Final Engineering Construction
Programming Engineering Selection Selection (O&M)

Life-Cycle Stages of Project

Types of Estimates
 Approximate Estimates
◦ Conceptual Estimates
◦ Feasibility Estimates
◦ Budget Estimates
 Detailed Estimates
◦ Final Estimates
◦ Bid / Tender Estimates
AACE International
 American Association of Cost Engineers
 http://web.aacei.org/
 Five types of cost estimates

◦ Class 1
◦ Class 2
◦ Class 3
◦ Class 4
◦ Class 5
https
://web.aacei.org/docs/default-source/toc/toc_18r-97.
pdf?sfvrsn=2
Approximate Estimates
 Who prepare?
◦ Usually done by a Owner
 Feasibility studies to justify pursuing a project
◦ Usually done by A/E
 Design studies, design alternatives
◦ Usually done by CM firm
 As an agent for the owner
◦ Design/Build firm
 During negotiation phase of the project
Approximate Estimates
 Requires considerable judgment
◦ Knowledge of past projects
◦ Cost information (Cost Indices)
 Approximations
◦ Similar type of projects
◦ Similar type of structures, capacities
◦ Requires adjustment for time, location, size
Approximate Estimates
 Usually based on unit costs of work in place
◦ $/ SF, $/CY, $/LF, $/apartment, $/mile
 Usually made for the decision process to
proceed on design or abandon the project
 Should be cautious about the complexity of

the projects
Detailed Estimates
 Almost always done by Contractor
 Based on defined scope of work
◦ Quantities from design documents
 Quotes are obtained suppliers, sub-
contractors, and vendors
 Methodically done
◦ Check lists
◦ Coding systems developed from experience
contractor
Detailed Estimates
 Usually bid forms are used
 Includes direct cost

◦ Labor, Material, Equipment, and Subcontractor

 Includes indirect cost
◦ Overhead, Taxes, Bonds, Insurance etc.
 Includes contingency and profit
Steps for Preparing an
Estimate
 Review the scope of the project
◦ Consider effect of location, security, available
storage, traffic on costs
 Determine quantities
◦ Material quantity takeoff
 Price material
◦ Material cost = Quantity x Unit price of material
Steps for Preparing an
Estimate
 Price labor
◦ Based on labor production rates and crew sizes
◦ Labor cost = [ (quantity)/(labor production rates)]
x [labor rate]
 Price equipment
◦ Based on equipment production rates and
equipment spreads
◦ Equipment cost = [ (quantity)/(equip. production
rates)] x [equip. rate]
Steps for Preparing an
Estimate
 Obtain specialty sub-contractors’ bid
 Obtain suppliers’ bid
 Calculate taxes, bonds, insurance, and
overhead
 Contingency
◦ Potential unforeseen work based on the amount of
risk
 Profit
◦ Compensation costs for performing the work
Types of Bids
 Lump-Sum Bid
◦ Hard dollar bid or fixed price bid
◦ Must have 100% design complete
◦ Risks shifted to the contractor
 Unit Price Bid
◦ Quantities of material will vary
◦ Bid forms defined the pay quantities and unit of
measures
◦ Risks shared between owner and contractor
Types of Bids
 Cost Plus Bid
◦ May be cost plus percentage, fixed fee etc.
◦ Used for unknown scope of work
◦ Risks shifted to the owner
 Negotiated Work
◦ Typically cost plus with a Guaranteed Maximum
Price (GMP), with cost sharing if under maximum
amount or penalty if costs are greater than
maximum
Estimating Formats
 Building Construction
◦ Breakdown of cost estimates according to
Construction Specification Institute (CSI)
◦ CSI has 50 divisions (New CSI Master Format,
2014)
 Heavy Engineering Construction
◦ Breakdown of cost estimates according to Work
Breakdown Structure (WBS)
◦ WBS is established by project team
Example of Building Construction Project

Existing Conditions

Openings

Removed
26
Latest CSI Divisions
 49 Divisions (Numerically)
◦ Procurement and Contract – Division 00
◦ Divisions start from 01 and end 48
◦ 35 Divisions used

 Divisions Names and Numbers

 CSI website (http://csinet.org/)

 Work Breakdown Structure
Highway Project

Roadway Structures Bridges

Earthwork Pavement Retaining Walls Culverts Sub-Structure Super-Structure

Electric Power Construction
Project
Construction Bid
Documents
 Bid documents Vs. Contract Documents
 Building Construction Specification
 Heavy Highway Specifications
 Parts of Bid Documents
Bid Documents vs. Contract
Documents
 Bid documents
◦ Documents provided before bidding process
◦ Consists of invitations to bid, instructions to
bidders, bid forms, drawings, specifications,
bonds, insurance and addenda
 Contract documents
◦ Documents provided after the contract is signed
◦ Consists of the documents included in bid
documents
Building Construction
Specification
 CSI master format consists of 34 divisions
 Two groups

◦ Procurement and Contracting Requirements

Group - 00
◦ Specification Group – 01 to 48
Specification Divisions
 Division 01 – General Requirements
 Division 02 – Existing Conditions
 Division 03 – Concrete
 Division 04 – Masonry
 Division 05 – Metals
 Division 06 – Wood, Plastics, and
Composites
 Division 07 – Thermal and Moisture
Protection
Specification Divisions
 Division 08 – Openings
 Division 09 – Finishes
 Division 10 – Specialties
 Division 11 – Equipment
 Division 12 – Furnishings
 Division 13 – Special Construction
 Division 14 – Conveying Equipment
Specification Divisions
 Division 21 – Fire Suppression
 Division 22 – Plumbing
 Division 23 – Heating, Ventilating, and Air

Conditioning
 Division 25 - Integrated Automation
 Division 26 – Electrical
 Division 27 – Communication
 Division 28 - Electronic Safety and Security
Specification Divisions
 Division 31 – Earthwork
 Division 32 - Exterior Improvements
 Division 33 – Utilities
 Division 34 – Transportation
 Division 35 – Waterway and Marine

Construction
Specification Divisions
 Division 40 – Process Integration
 Division 41 – Material Processing and

Handling Equipment
 Division 42 Process Heating, Cooling, and

Drying Equipment
 Division 43 Process Gas and Liquid

Handling, Purification, and Storage

Equipment
Specification Divisions
 Division 44 – Pollution Control Equipment
 Division 45 – Industry-Specific

Manufacturing Equipment
 Division 46 – Water and Wastewater

Equipment
 Division 48 – Electrical Power Generation

(Master Format)
Federal Highway Administration
(FHWA) Specification

 FHWA specification has 10 divisions

100 – General Requirements
150 – Project Requirements
200 – Earthwork
250 – Slope Reinforcement and Retaining Walls
300 – Aggregate Courses
FHWA Specification
 FHWA specification has 10 divisions
400 – Asphalt Pavements and Surface
Treatments
500 – Rigid Pavements
550 – Bridge Construction
600 – Incidental Construction
700 – Materials
(FHWA specification)
NDOT Specification
 Division I – General Requirements
 Division II – Construction Details
 Division III – Materials Details
 Number of Sections

(NDOT Specifications)
Parts of Bid Documents
 Bid Invitations
 Instructions to Bidders
 Contract Proposal Forms
 Bid Forms
 Bid Specifications
 Other Items
Bid Invitations
 Private Projects (competitive or negotiated)
◦ Selective invitations to bidders ( Pre-selected
contractor)
◦ Usually selected from pre-approved bidder based
upon several factors : length of time on
construction business, performance on past
projects, financial strength ( bonding capacity,
assets, debts)
◦ Acquaintance with A/E and Owner
Bid Invitations
 Public Projects (competitive bidding required
by law)
◦ Open invitation for bid ( Bidders may be required
to be pre-qualified)
◦ Generally requires bond (Bid, Performance, and
Payment)
◦ Requires prevailing wage rate for workers
◦ Typically requires 20 days advertisement in the
public media
Bid Invitations
 Invitations should specify
◦ Job location
◦ General description of works
◦ Deposits for plans & specs and where and when to
obtain
◦ How, when, and where bids will be opened
◦ Bid forms required
◦ Required amount of bid bond
◦ Text book page no. 27
Bid Invitation
Advertisement
 Public media – newspaper
 National journals – ENR, Dodge Report
 Regional journals – Construction News
Instruction to Bidders
 Receipt and opening date of bids
 Withdrawal of bids
 Qualification of bidders
 Time of completion
 Instructions to use both words and figures in

submitting cost amounts

 Text book page no. 27
Contract Proposal Forms
 Bid Forms
 Bonds
 Contract form required for signature upon

award of contract
 Affidavit of non-discrimination
 General conditions of contracts (AIA, EJCDC)
 The American Institute of Architect

(AIA website)
 Engineers Joint Contract Documents

Committee(EJCDC website)
Bid Forms
 Bid Forms for Lump-sum Contract
◦ Lump-sum amount
◦ No breakdown of the quantities and unit price
◦ Page 30 Text book
 Bid Forms for Unit-price Contract
◦ Pay quantities
◦ Unit Price
◦ Page 31 Text book
Bonds
 Contractor secures bonds from bonding
company
 Bonds are financial and legal protection for

the owner
 Three types of bonds

◦ Bid bond
◦ Performance bond
◦ Payment bond
Bid Bond
 Generally 5 to 20% of the bid amount
 Cashier’s check or certified check
 If bidder refuses to sign the contract, the

owner may retain the bid bond as liquidated

damages
Performance Bond
 Provides by surety company
 Lasts for the construction period of a project
 If a contractor fails to complete a project,

surety company will complete a project

 The cost of the bond usually is based on the

amount of the contract and the duration for

the project
Payment Bond
 Material and labor payment bond
 Surety company provides this bond
 If the contractor fails to pay labor and

material costs on construction, surety

company will pay it
Insurance
 Risk insurance
◦ Damage cause by fire, wind, and hail
◦ Based on completed value of the project
◦ Generally 60% of the completed value
◦ Rate varies for different types of construction
 Public Liability & Property Damage Insur.
◦ Insured against injuries to public
◦ Insured against public property damage
Insurance
 Workmen’s Compensation Insurance
◦ For the protection of workers as a result of injury
and death
◦ Provides medical expense, payment for the lost
wages during the period of injury
◦ Regulations are established by state laws
◦ Rate varies according to types of work (carpenter,
iron worker, etc.)
Bids Specification
 Drawings
◦ Plans or Prints

 Technical Specification
◦ Contains how to build a project
Others Items
 Addendum
◦ Change in the contract document during bidding
◦ Bidder must estimate cost of all addenda
 Alternates
◦ Addition or subtraction to a base bid
 Change Order
◦ Change in the contract documents during
construction