Construction Cost Estimation Methods and Objectives

Construction estimation is the process of determining the items of work that comprises the project and the rate of materials employed in the project to perform the work. This way of forecasting helps to understand the idea of expenditure that is incurred on the construction of a building, dam, road etc.

Estimation helps to get an idea about how much the project will cost before starting to perform it practically. It hence helps to understand the feasibility of the construction project. Large construction projects employ different types of construction estimation methods to get high precision and quality.

Objectives of Estimating in Construction

The important objective of estimation in construction projects are:

1. To determine the project’s scope and feasibility to finalize and allocate the budget of a construction project.
2. To help contractors to decided whether or not to bid on a project.
3. To determine the probable cost of project.
4. To find the quantity of materials and labor associated with the project.
5. To know the time of completion of project.
6. To have a control on expenditure during execution of the project.
7. To help assist the project bidding activities, tender process and other technical sanctions.
8. To help in fixing the rent, sales process and other valuation of properties.

A good cost estimate saves the builder from losing any money and also help the customer to avoid overpaying situations. The estimating process helps to promote the component of earned value management - which is a project management technique that works based on the principle of tracking the project’s performance against the total time and the cost estimate of the construction project.

Types of Construction Estimation Methods

The different types of estimates used in construction are:

1. Rough Cost Estimate
2. Plinth Area Estimate
3. Cubical Content Estimate
4. Item Rate Estimate or Detailed Estimate
5. Revised Estimate
6. Supplementary Estimate
7. Repair and Maintenance Estimate

1. Rough Cost Estimate Method for Construction Estimation

Rough Cost Estimate is also called a preliminary or approximate estimate method. Preliminary estimate gives an idea about the financial policy matter. Estimate prepared by collecting the practical knowledge and cost of similar works.

The preliminary estimates for a road construction project determine the expenditure incurred for the construction of every kilometer of the road is taken into consideration. This estimate carries the following documents:

a.    Detailed Report

b.    Site plan of proposal

c.    Provision of electricity and water supply system

d.    Land Acquisition information etc.

The preliminary estimate determined must be accurate enough that only 10 to 15% percentage variation from the original cost of project is expected.

2. Plinth Area Estimate Method for Construction Estimation

The plinth area of the building multiplied by the plinth area rate of the country region is the plinth area estimate. The rate of plinth area is fixed from the cost of similar building buildings that were constructed in the region.

a) Rate = Total construction cost/Plinth area
b) The rate is used for new construction.
c) The documents attached along the plinth area estimates are:

•  Line plan of the structure with brief specifications.
•  The cost of the added services line electric supply, water etc. 

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3. Cubical Content Estimate Method for Construction

The plinth area multiplied with the height of the building gives the cubic contents estimates. The height is the distance between the floor level and the top of the roof. This carries documents similar to the ones explained before.

1.  The estimate is worked based on cubical contents of the proposed building.
2.  The rate per cubic meter is then calculated.
3.  Cubic content method is more accurate compared to plinth area method
4.  The cubic content rates are taken from the cost of similar building constructed before in the locality.

4. Detailed or Item Rate Estimate in Construction

1. The most accurate method of estimation. The estimates are derived based on the plan and sections of the building.
2. The building construction work are categorized under each subhead work like excavation, foundation. The quantity of items coming under each subhead works are determined in detailed from the dimensions of the drawings.
3. The total cost is estimated as the total abstract of the cost.
4. The abstract cost estimates give the quantities required and the rate for every item. This is attached at the end of the detailed estimate.
5. The detailed specifications and the drawings must be submitted along with the estimate.

5. Revised Estimate in Construction 

This is also a type of detailed estimate. This is developed as a revision of detailed estimate when the detailed estimate exceeds by 10% because of insufficient rate or some other reasons.

The report must attach along with the revised estimate in construction to know the reason behind the increase in the cost.

6. Supplementary Estimate in Construction

A supplementary estimate in construction is an estimate of additional work in addition to the original construction work. This additional work is a project that supplements the original work.

7. Repair and Maintenance Estimate

The estimation of project that comprises mainly repair and maintenance work is called as repair and maintenance estimation. Mostly the maintenance is carried out annually. The estimated maintenance amount must not be more than 1.5% of the total capital cost of the work. 

The purpose and the level of accuracy required by the project decides the choice of estimation method. The estimation method for material supply must be accurately determined, while the estimation of feasibility study is less accurate.

Also Read:  What is Construction Cost Estimation?