Budget Estimating

Aim of the lecture

To increase the student’s understanding of

construction project cost estimation
Learning outcomes
 Describe the role of the cost estimator

 Describe the methods of costing

 Describe the cost estimates appropriate for different

project stages
 The Estimator - Outline

 Role of the estimator

 Standard methods of costing

 Other methods of costing

 Cost estimates

 Conclusion
The role of the Estimator
 Facilitate cost control
Either maximise standard for a given amount of money
Or provide a fixed standard in the most economic way
Or both the above

Cost

Quality Time
 Standard methods of costing
• Cube method

• Correlates the cost with the cubic content of a building

• Good for simple structures of similar size and function

• Insensitive to shape and horizontal and/or vertical

subdivisions – therefore does not permit appraisal of
different designs
 Standard methods of costing
• Storey enclosure method

• The unit of measurement is the sum of:

• 2 x area of lowest floor at or above ground level and 3
x area of lowest floor below ground level
• Area of roof
• Area of upper floors x (2 + appropriate positional factor
in increments of 0.15)
• Area of external walls above ground and 2 x area of
external walls below ground level.
 Standard methods of costing
• Storey enclosure method

• Caters for shape and can be used quickly

• Uses an abstract pricing parameter

• Does not divide the cost into component parts

• Could exclude areas of substantial cost importance

 Standard methods of costing
• Elemental costing method

• Divides the project into elements

• Elements must have the following qualities:
• Constant function regardless of specification
• Form a substantial part of the structure
• Appear in most structures e.g. walls, windows etc
 Standard methods of costing
• Elemental costing method

• The total cost (forecast) can be divided against each

elemental heading together with a description of the
specification and its cost per unit area of structure.
Thus from post-design cost analysis a system of pre-
design cost planning can be devised.

• Parker-Morris standards for housing projects

 Other methods of costing
• Target cost planning method

• Maximum expenditure is determined at the outset

• Maximum expenditure is broken into elemental target
costs (the cost plan)
• The designer develops the design to meet the
elemental cost targets (with little flexibility) and
maximum expenditure with absolute rigidity
 Other methods of costing
• Comparative cost planning method

• Maximum expenditure is determined at the outset

• Maximum expenditure is broken into elemental target costs (the
cost plan)
• Designer produces a sketch design
• Alternative elemental costs for the sketch design are estimated
by another party
• Designer chooses from the alternative elemental forms
• Designer’s choice is constrained by the targets (with little
flexibility) and maximum expenditure with absolute rigidity
 Cost estimates
• Method and cost estimate dependent on project phase

• 6 cost estimates
• Budget estimate
• Programming estimate
• Schematic estimate
• Preliminary estimate
• Working document estimate
• Construction estimate
 Standard methods of costing
• Budget estimate

• Earliest estimate
• Related to the number of people to be served, units
produced, or function to be accomplished
• Reliant on historical information
 Standard methods of costing
• Programming estimate

• Developed after budget has been agreed

• Refines the budget estimate
• Based on dimensional square and cubic units
• Takes into consideration basic size factors, cost
escalation during design and construction, special
cost areas, and special conditions or problems,
equipment, furnishing, site costs and any other
relevant factors.
Standard methods of costing
• Schematic estimate

• Developed after outline design is completed

• Utilises area costs and parametric costing or cost
indices.
• Parametric costing involves identifying fifteen to
twenty major sub-systems within a building and then
applying costs to each system based upon historical
data or examples of similar buildings.
 Standard methods of costing
• Preliminary estimate

• Developed after detailed structural (substructure

and superstructure) design (including special
arrangement to allow take-off) is completed
• Uses an area system for services, finishes etc.
Standard methods of costing
• Working document estimate

• Developed after the entire design is completed and

working drawings prepared
• Based on a quantity take-off basis from working
drawings
• Based on identifying the very detailed elements of the
structure and comparing costs with similar elements
in previous projects
 Standard methods of costing
• Construction estimate

• Developed during the construction phase

• Based on reality as knowledge is available as to how
much certain aspects of the job have cost
• Could involve changes in specification and/or detail in
order to adjust the overall finished cost.
• Could use the actual cost of working as a guideline for
estimating extra work or other changes
 Conclusion
• Have you:
• Increased your understanding of construction project
estimation?

• Can you:
• Describe the role of the cost estimator?
• Describe the methods of costing?
• Describe the cost estimates appropriate for different project
stages?