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PMAer Saumil Maniar, PE, PMP, is a multiskilled Project Manager with significant experience in cost estimating, cost controls, schedule monitoring, construction management, and construction project control services. His experience includes working with public and private stakeholders.
What is construction cost estimating?
Construction cost estimating calculates the future cost of a construction project/program on the basis of available information which is typically local knowledge combined with reference construction cost databases. It differs from construction cost engineering which creates cost data and algorithms for construction projects based on scientific principles and techniques applied to profitability analysis, project management, and project planning.
Why is estimating important in construction?
A construction project is the function of three major components ─ scope, cost, and schedule. If you change one of these components, the other two are affected. Hence, it is clear cost estimates are foundational to a construction project.
What do construction project estimators do?
In today’s world, cost estimators don multiple hats. At a minimum, a cost estimator is expected to review project information, assume means and methods, and, based on market information, develop a construction estimate for specific work to be performed at a given time.
What skills or certifications are needed to perform construction cost estimates?
Construction site experience helps develop realistic cost estimates. Also recommended is professional development leading to well-known industry certificates such as AACEi’s CEP (Certified Estimating Professional) and ASPE’s CPE (Certified Professional Estimator).
What is the process or key steps to estimate building construction costs?
Cost estimating is an art, and an estimate is a function of available information. A good estimate should refer to the scope of work, review project delivery requirements, clarify construction means and methods, report assumptions used in the process, and clearly provide the calculation of material, equipment, labor, and time-related costs.
How many types of estimates are there?
In practice, cost estimates for large capital programs can be put into three buckets – order of magnitude estimates, detailed engineer’s estimates, and change order estimates. There are other specialty cost estimates, which may be required for a specific need ─ value engineering estimates, life-cycle estimates, operating costs estimates, etc. AACEi provides cost estimate classification as well, ranging from Class 1 through 5, based on the level of detail, where a Class 5 estimate is the most detailed and most accurate.
What are the two types of estimation? (point and interval)
Point estimation is a method used to develop accurate one-time estimates. For example, a three-point estimate would involve the development of a best case, worst case, and a middle case estimate that are boiled down to a single cost estimate. An interval estimate reflects the development of an estimate over time. As design progresses from 30% to 60% to 90% to 100%, a coordinating estimate is refined to match scope and reduce the number of assumptions, thereby leading to better accuracy.
How does technology support estimating construction costs?
Cost estimating is a very nascent field. The process is geared towards the development of a final, accurate, and scoped cost; and most tools and methods are used to help reach this goal. Several proprietary database softwares are used for cost estimating, including Sage Timberline, HCSS Heavy Bid, Microsoft Office suite, On-Screen Takeoff, among others.
Towards the front-end, software like On-Screen Take-off and AutoCAD Revit are commonly used to do take-offs; large estimates are commonly developed in database software like Heavy Bid HCSS and Timberline; and cost management can be tied in with several BIM products.
What is RSMeans cost data? How do you use RSMeans?
RSMeans, or Gordian CostWorks, is an excellent online database that includes unit costs for commonly occurring construction activities. The database provides crew size, production rates, unit material costs, unit equipment costs, and unit labor costs for these activities. I maintain my own database, so I do not use Means for local New York area work. For projects for which I do not have a database of costs, I refer to their unit prices to understand cost range and crew sizes.
What is a quantity takeoff?
Quantity takeoff is the process of measuring the number or size of a construction activity from a given drawing set. It is key to understand the construction activity, so the right measurement unit is utilized. This will eventually guide the unit pricing process.
What is the cost contingency estimate in projects?
Cost contingency, or risk and contingency reflects a below-the-line markup utilized to adjust the direct costs for unknown construction risks. There are several terminologies used to address risk contingencies in an estimate – allocated versus unallocated contingencies, design contingencies, weather-related contingencies etc. A risk workshop and the right dictionary of terms can help a cost estimator use the right amount of cost contingencies in the project.
How does a good cost estimate/estimator keep construction projects from going over budget?
With increasing budget pressures and reduced revenues, good cost estimators have started focusing on providing value engineering proposals, cost-benefit studies, etc. Although in an ideal world, cost estimates should be free of any confirmation bias (of meeting a particular number).
What type of construction projects are the most challenging to estimate? Why?
Project delivery mechanisms are maturing and more clients prefer Design-Build, P3 etc. type contracts. In these instances, the cost estimates are developed with limited design development and a lot of risk is shared to meet budgets and schedules. Such projects are the most challenging, as scope is not completely known, and stakeholders have the latitude to be creative within contractual boundaries.
During your career as an estimator, have you encountered project budget obstacles? If so, how did you overcome them?
Yes, mega capital projects have budgets and I have had several capital cost estimates that skirt those boundaries. Scope review, construction means and methods, use of precast/ factory produced elements, and comparative design development studies have helped overcome some obstacles. My recommendation to the client has always been to better understand what scope is absolutely required for their project to succeed, and which high-priced items should be developed further to optimize the cost estimate.
What do you think will be the next innovation in estimating?
Cost estimators are increasingly becoming sensitive to client budgets and to increasing project risks – political risks, economic risks, labor shortages etc. The next frontier in the practice is increasingly dependent on data. It could be innovative data gathering, analysis, and data mining from new, ongoing, and completed projects. This will greatly help cost estimators turn around a quality-assured product in shorter time periods with higher accuracy and within defined parameters.