Estimates during design development:
During design development phase of the project, the cost estimate is prepared on the basis of more detailed design information and schematic documents. With the improved level of information, the most of the major project items namely volume of earthwork (m3), volume of concrete (m3), weight of steel (tons) etc. can be quantified and the cost estimate is prepared using the known unit prices. Detailed information from subcontractors or material suppliers should be obtained and used in pricing the major project items. During this phase, all the identified major systems of the project namely structural systems (reinforced concrete vs. structural steel), masonry (clay brick units vs. concrete masonry units), pile foundation (concrete pile vs. steel pile) etc. are priced and then cost of each system is compared with that obtained from past similar projects. The project elements costing too high or too low as compared to past data should be reviewed and accordingly adjusted. With the availability of detailed design information and improved system definition, the expected degree of accuracy in this estimate is higher as compared to that in estimate prepared during schematic design phase of the project.
Estimates during procurement (i.e. estimates for construction of the project):
During this phase of the project, the cost estimate is prepared on the basis of complete set of contract documents that defines the project. The contractors bidding for the project prepare the cost estimate in accordance with contract documents by taking into consideration the estimated project duration. As already mentioned in the previous lecture
(Lecture-1 of this module),
the total cost of project can be divided into two categories namely direct cost and indirect cost. Direct cost includes cost of materials, equipment and labor associated with each item of work and cost of subcontracted works. Indirect costs are the costs which are not attributed to each item of work and are calculated for the entire project and include overhead cost, contingency and profit. The owner team also prepares the cost estimate to check the accuracy of the bid prices quoted by the contractors and negotiate a reasonable price with the contractor. As this cost estimate is prepared in accordance with complete set of contract documents of the project, the degree of accuracy of this estimate is extremely high.
Estimates for change orders during construction:
This estimate is prepared to cater the changes in the project scope as required by the owner during construction phase of the project.