Before you begin a project, it’s important to understand how to estimate the cost of a building’s various features. There are three main types of estimates: Level 1, Level 5, and the most advanced level, the Level 6 estimate. In this article, we’ll discuss each one in detail. After reading this article, you should feel more confident when estimating your next project. This article will also cover how to calculate your final cost based on the estimates that you’ve made.
A cost estimate is an important tool for managing costs during construction. It helps define an initial budget, ensure contractors submit accurate bids, and allocate budget limits to architects. The estimate can also help determine the optimal materials costs, and maximize efficiency and cost control. It also provides a reliable price reference for negotiating contractor and vendor quotes. Here are some tips on cost estimating for building services:
Identify problem areas and identify their costs. Use an estimating procedure to assign cost responsibilities to the field personnel. These procedures also help track field activities and help management monitor the costs. In some cases, daily or weekly reports may be required. In other cases, a cost estimate may be a mixed-craft project. Regardless of the method used, cost estimating is a key part of building management. The process begins with the planning phase.
Independent cost estimates provide a solid foundation for project budgeting. Accurate cost estimates can mitigate risk and minimize conflicting claims during the construction phase. They can help to finalize the scope and identify the budget. An accurate estimate is also the basis for comparing competing bids. A good estimate will reduce the risks and costs associated with commercial construction projects. For these reasons, cost estimates are essential for effective budgeting. The independent estimates are designed to account for every single expenditure and serve as a basis for comparison.
Cost estimating is a fundamental process for the construction industry. It helps determine the feasibility of a project, the scope of the project, and the budget allocations necessary to ensure a successful build. Proper cost estimating practices will prevent miscalculations and ensure the project budget reflects the decisions made during the integrated design process. So, how can a cost estimator improve the accuracy of cost estimates? Consider the following tips to make your cost estimation process more efficient and successful.
Level 1 estimate
A level one estimate is based on a minimum set of information and is a reasonable, unbiased guideline for the project. Class 2 and class 3 estimates are based on a 60% design development level and establish a detailed control baseline. A level three estimate is more detailed than a class two, and includes a range of tens of thousands of unit cost line items. The method of estimating undefined areas is commonly called “assumed level detail” or “forced detail.”
A level five estimate, or bid estimate, is based on the design and construction documents. It evaluates the likelihood of the cost of the project and provides a basis for comparing bids and change orders. It is typically the final estimate submitted to the Owner. As the project advances, the accuracy of the estimate increases. During this stage, the range of estimated costs is much greater than it will be later. As the project moves along, the range narrows.
The purpose of a Level two estimate is to provide an accurate and more complete estimate. The estimate is based on a more detailed scope of work and may be used to price a design scheme or alternative. It is also useful for assessing feasibility. In some cases, a manager will authorize the project budget based on a Level four estimate. This type of estimate analyzes the project’s objectives, design, and deliverables. In addition, it is used to keep expenditures within a budget.
Once a design has been approved, the project is ready for construction. The next step is to get the building services estimate. Level three estimates are more detailed than a level one. They include costs, quantities, overhead, profit, taxes, and the bond. As the project proceeds, the levels of detail will continue to increase. The more detailed the design documentation, the more accurate the estimate will be. In fact, this type of estimate is the basis for value engineering applications.
Class 3 estimates are prepared to support a full project funding request and are used as the project’s budget until more detailed estimates are presented to the client. They also serve as the baseline for evaluating subcontractor claims. A class 3 estimate should include appropriate markups for this project phase. It is critical to understand the difference between class 2 and class 1 estimates when preparing a level 3 estimate. They should be used only for construction-related costs.
Level 5 estimate
A level five estimate for building services is the most accurate cost assessment of a construction project. It is based on construction documents and identifies probable costs. It is often used to determine the scope of the project and to make decisions regarding subcontractor bids and change orders. There are three basic types of level five estimates. Read on to learn more about each. The purpose of a level five estimate is to determine if a project is viable and cost-effective.
The first level of estimates is a Level 1 estimate. This type of estimate is a first step toward budgetary and feasibility decisions. It requires historical information and may include cost per square foot, the number of seats or cars, or other details. In addition to these basic details, a Level 1 estimate may also require a schematic layout and a general functional description of the project. Depending on the complexity of the project, a Level 5 estimate may be more accurate.
A Level 5 estimate for building services is a highly accurate estimate of the cost of the project. While these estimates may have a wide range of accuracy, they are useful for feasibility assessments. Project managers use these estimates to keep expenditures within a budget. In some instances, a level 5 estimate may be used as a basis for a project budget. If a project is completed on time and within budget, a level five estimate will ensure it’s a success.
In addition to using a Level 5 estimate, the process of preparing a bid estimate is equally important. It begins by organizing the elements of the project, including the scope of work and methods of construction. Once the elements have been grouped, the estimator will assign prices to them. This estimate will be finalized, formatted, and peer-reviewed. During the construction process, estimators often summarize the budget and compare it to other estimates.
Level 6 estimate
A high-level estimate for building services is prepared within the same framework as the Study Phase. It uses the same structure as the Study Phase, but details costs down to the item level. It is important to use the most up-to-date information available. The spreadsheet automatically adds hierarchy to level 0 and the “unassigned” item group has a value of “90”. Some items are detailed down to level 2 while others do not.
The process of preparing a detailed estimate is extensive, involving several hundreds of hours of work, gathering project data, and performing engineering. However, estimating each project would be nearly impossible without hundreds of hours of work. This is why ballpark figures are commonly accepted in business plan projections. In contrast, Class 5 estimates are drawn from incomplete information and are generally inaccurate by as much as 2%. The accuracy range of a Class 6 estimate is between -5 and 10% on the low and +10 to 20% on the high end.