Cost estimators prepare estimates for many purposes throughout the project lifecycle. They include estimates used for investment decisions, comparing alternative plans, budgeting and cost control.
Cost Estimating in Civil Engineering Projects can be complicated due to the number of factors that affect construction costs. One of the most significant is location relative to economic centers.
Cost Analysis
Cost analysis is an important component of a civil engineering project. This process involves a review of the initial construction estimate and developing a more accurate figure that is based on real values. It also takes into account fluctuations in currency values, which can affect the final cost of a project. It is critical that estimators understand the impact of these fluctuations on estimates, as they may affect the overall accuracy of a project.
A base estimate is an early estimate that includes all projected costs, excluding unforeseen expenses. It is often prepared during the Front End Engineering Design (FEED) stage of a project. It is then used for budget planning and construction financing. In addition, it can help businesses identify opportunities for efficiencies in their construction processes.
Another type of estimate is a detailed estimate, which is typically created during the detailed design phase. It breaks down the design items into their components, and then uses the unit cost method to calculate each component. This method is often more accurate than the base estimate, but it can take a long time to produce.
During the detailed design phase, it is also essential to prepare risk and backup plans. These can include backup equipment, cost escalation allowances, and labor contingencies. Including these elements in the estimate can prevent projects from exceeding their original budgets.
Cost Estimating
Cost estimating is an important part of construction projects. It can help companies budget for unforeseen risks and ensure project profitability. There are many different methods of preparing cost estimates. The method chosen depends on the level of detail and complexity of the project. Some methods are more suitable for early-stage estimating, while others are better suited to detailed estimating. A good estimator should have a thorough understanding of design, pricing and procurement practices.
Cost estimation is a complex process that requires experience and judgment to produce accurate results. A high-quality estimate should cover all components of the project, including labor and materials. It should also include a risk analysis and a contingency reserve. A thorough project cost estimate should be based on the most recent unit costs, which are typically obtained from industry estimating databases.
The scope of a project’s work is often determined at the schematic level, which lends itself to rough estimates that use an engineer’s previous experience with similar projects. In addition, a general understanding of the location and climate may provide clues about additional costs such as inclement weather or the need for specialized equipment.
The more detailed a cost estimate is, the more accurate it will be. Detailed estimates break down design items into their component parts and calculate them individually. The result is a much more accurate estimate than a point value.
Project Budgeting
Civil engineers are responsible for building the bridges, highways, and buildings that we rely on in modern life. Their expertise is critical to ensure the safety of our roads and buildings, as well as providing value for money by reducing construction costs through efficient design and effective monitoring.
To keep project costs under control, the best practice is to prepare a total project budget as early as possible. Stonemark typically aims to prepare the first budget at completion of the Schematic Design phase (when the design drawings are about 20% complete).
The project budget includes not only line item hard construction cost, but also all project expenses including soft costs such as architectural, engineering (mechanical, electrical, plumbing, structural, geotechnical and civil), architectural fees, and FF&E (furniture, fixtures and equipment). The budget also include permit and inspection fees as well as other owner’s costs such as legal, financing or, if it is a development project, marketing and leasing fees.
Expenses are monitored on a regular basis to ensure that they remain within the established budget, either through a spreadsheet system or through specialized construction cost management software. A contingency budget is also incorporated to handle unforeseen cost increases, such as market trends or weather conditions. This allows us to maintain our competitive pricing structure and deliver a high quality project within the estimated cost.
Contract Negotiation
Having a comprehensive cost estimation process in place will help your project stay on schedule and within budget. It will also give you the power to make smart decisions when negotiating with contractors or project owners. However, it is vital to keep in mind that not all estimates are accurate. Inaccurate estimates can create significant friction between project teams and cause a project to overrun its estimated costs.
Estimators usually group construction costs into two categories: direct costs and indirect costs. Direct costs are the items directly associated with the actual construction of the project, including team wages, equipment rental, and materials. Indirect costs are non-revenue generating expenses such as temporary utilities, security costs, and office space rental.
In order to make a more precise estimate, estimators use various methods for determining unit costs. For example, a take-off method involves calculating material quantities based on the design drawings. This information is then multiplied by the typical unit price for each type of material. This is an effective method for estimating the cost of materials, but it is also time-consuming.
Another method that can yield more accurate results is the average method, which calculates the overall amount of fill or excavated material required to get to a desired elevation. This method is typically used on smaller projects. For more detailed estimates, a firm may opt for the budget estimate method, which is typically made after a FEED study and before engineering design begins.