CONTENT

S
00 Abstract 02 - 03
01 Importance of Accuracy 04
In Cost Estimating

02 Estimating Techniques 05

03 Range Estimating 06 - 07

04 Composition of Project 08
Price

05 Types of Estimates 09
06 Accuracy by Error
10
Prevention

CEE 422 Construction, University of Illinois,

Cost Analysis. Accuracy of Construction Cost Urbana – Champaign. Fall ’09.
Prof. Ibrahim Odeh Estimating Ayuss S. Kumar
 00 Abstract

 Accuracy in Cost Estimating helps the Architect – needs to make informed decisions
to the owner regarding:

Materials
Phases of Building Systems
Construction

Scale of Project

Feasibility Space Planning

Built up Areas
Ayuss S. Kumar

02
 00 Abstract
Cost Estimating Accuracy depends on :
Scope of Project
Reliability on Info.

Labor Unions

Government Rules
& Taxes

Historical Data
Time Factor
Site & Weather
Conditions
Ayuss S. Kumar

03
 01 Importance of Accuracy in Cost Estimating

 Investment to revenue generated – financing.

 Helps keep the project on budget during execution.

 Control on cash flow.

 Helps justify progress payment to the contractor.

 Updates historical data base for future project references.

 Arbitration – unresolved claims.

Ayuss S. Kumar

04
 02 Estimating Techniques
 4 Main types of Estimating Techniques

Project Comparison or Area & Volume Assembly & System Unit Price & Scheduling
Parametric Cost Estimating Estimating Estimate
Estimating

15-20% 5-15% 10% 2 - 5%

Accuracy Accuracy Accuracy Accuracy
Ayuss S. Kumar

Fig.1 - Source: From Concept to Bid…

Successful Estimating Methods by John D
Bledsoe.
05
 03 Range Estimating
 Assessment of how far a project’s final cost may vary (+/- %) from the single point
value that represents the estimate.

 Estimate - range of cost outcomes - Represented as a probability distribution curve.

Fig.2 & 3- Source: From Concept to Bid…

Successful Estimating Methods by John D
Bledsoe.

Contingency helps increase accuracy of estimating.

Ayuss S. Kumar

Depends on where the contingency is placed about the point estimate.

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 03 Range Estimating
 Estimate accuracy tends to improve with project definition.

 Class 5 – High Range +30% to 100%

Low range -20% to -50%

 Class 4 – High Range +20% to 50%

Low range -15% to -30%

 Class 3 – High Range +10% to 30%

Low Range -10% to -20%

Fig4 - Source: From Concept to Bid…

Successful Estimating Methods by John D  Class 2 – High Range +10% to20%
Bledsoe.
Low Range - 10% to -15%

 Class 1 – High Range + 5% to 10%

Low Range -5% to 10%
Ayuss S. Kumar

07
 04 Composition of Project Price
 3 Main types of pricing for a project

Direct Costs Contingency Costs Margin

Labor Estimate Indirect

Contingency Costs
Owners Company
Material
Contingency Wide Costs

calculation
Method of
calculation
Method of

Equipment Designers Profit

Contingency % of project
cost
Contractors Parametric Location
Contingency
Area or State of
Volume Economy
Industry or Discipline or Assembly &
Facility Trade systems
Ayuss S. Kumar

Approach Approach Type of

Unit Price
Discipline

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 05 Types of Estimates
Design Process
Schematic Design Design Construction
Programming
Development Documents

Programming Schematic Design Design Development Budget Owners Final Cost

Budget Estimate Budget Estimate Estimate Estimate
Feasibility Order of Preliminary Baseline Definitive
Estimates Magnitude Estimate Estimate Estimate
Estimate
Negotiated Construction Procurement Process
Preconstruction Services Construction Operations

Preconstruction Guaranteed Maximum Price Change order

Services Estimate Estimate Estimate
Fixed Price Claims and Changes
Estimate Estimate
Bid Construction Procurement Process
Bid Construction Operations
Ayuss S. Kumar

Detailed Lump sum or Unit- Change order

price estimate Estimate
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 06 Accuracy by Error Prevention
 Common estimating errors:
1. Incorrectly adding a column of numbers.
2. Incorrectly calculating the price.
3. Incorrectly transferring the numbers from one page to another.
4. Making errors in dimensional conversions.
5. Omitting a page of the estimate.
6. Misplacing decimals.
7. Manual scaling of drawings – resolution error.
Ayuss S. Kumar

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Ayuss S. Kumar

Thank you

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