Estimating | Whole Building Design Guide

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by Scott CullenFaithful+Gould(http://www.fgould.com/usa/)Last updated: 11-28-2005

Throughout a project's planning, design, and construction phases, Cost Estimating is employed as one of the maintools of successful Cost Management. Once an initial budget has been established, it is important to test itsassumptions by employing a series of increasingly precise cost estimating techniques that coincide with furtherdevelopment of design and construction details. A sound understanding of the most common types of estimates, toolsfor estimating, historical database sources, and formats of estimates forms the basis of the more sophisticatedmethods of estimating. Estimating is typically concerned with the initial costsor first costsof accomplishing newconstruction or renovation projects, although it also plays a large part in life-cycle costing of design alternatives. The

estimates should be provided by a professional estimating firm either as part of the design team, or directly for theowner. In many instances the latter is preferred to ensure the independence of the estimate.

Estimating Formats

A key component of any cost-estimating effort is to establish the framework, or format, within whic h the project costswill be distributed, often referred to as a Work Breakdown Structure (WBS). There are a variety of estimating formatsused today, but the two most commonly used are MasterFormat and Uniformat. MasterFormat, often referred to as CSIMasterFormat(http://www.csinet.org/technic/mflite.htm), currently provides WBS into 16 trade/materials baseddivisional categories (in the process of being expanded to 49 divisions). Uniformat represents WBS costs according toa hierarchy of system elements, and is supported through various organizations, e.g. the U.S. General ServicesAdministration and CSI. Although different in their system headings, each provides a hierarchical WBS by systems.MasterFormat is widely used within the design and construction industry when estimating for Construction Documentdesign phases, as it aligns well with MasterFormat specification sections. On the other hand, Uniformat-basedestimating is often used in providing planning stage and early design phase estimating, where take-off measurementsdo not readily allow MasterFormat databases to be applied. In either case, the key to successful estimating is whetheraccurate cost data is available (through databases or other sources) that enable WBS quantities to be applied. Keyalso is whether WBS categories enable effective cost management, associated with the ability to compare currentestimate breakdowns to previous estimate componentshaving lineage back to the project's programmed budget.

Types of EstimatesPreliminary Estimates. Early in the planning stages, both building owners and designers must agree on ananticipated cost of the project at bid award. Preliminary Estimates are employed in the early planning phases of aproposed project to match an owner's needs, expre ssed as written programmatic requirements, with budget constraintsin order to establish its overall scope (size) and qua lity expectations. The WBS recommended at this stage is asys tems-based format, where elements of the buildi ng (e.g. exterior closure) are the method of categorization.Estimate comparisons at this stage are especially valuable in evaluating the feasibility of strategic alternatives beingconsidered to satisfy current and projected space requirements (e.g. new construction versus renovation, or leasespace). As the design is not fully developed at this stage, a design contingency is typically included, typically between10-15%. Issues which need to be identified at this juncture include method of procurement being considered, location

market factors, specific site constraints or challenges, proposed phasing plans, and start and finish dates. It isrecommended that a formal risk analysis be carried out at every stage in the design, but particularly in the planningstage when proactive steps can be taken to mitigate identified risks.

Intermediate Estimates. After proceeding with a preferred course of action, Intermediate Estimates are employed at

Estimating

INTRODUCTION
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various stages of project design development to maintain accountability for initial budget projections and as a means ofevaluating competing alternative construction assemblies, systems, and materials. On large projects it is commonpractice for an owner to employ a construction manager or professional estimator to continually update projectestimates and provide feedback on budget impacts of decisions on major design elements. The estimates will typicallystill be in a Uniformat systems WBS, however a summary/conversion may also be provided in CSI MasterFormat. Therisk assessment should be updated and a contingency factor calculated depending on the outcome of the risk analysis.As the design progresses and risks are mitigated, the design contingency can typically be reduced.

Many owners employ Earned Value Analysis(value_analysis.php) cost management practices as the design

progresses, to determine if the project is on track according to both schedule and budget. This can be asstraightforward as tracking costs across building systems (e.g. the mechanical system) or can be more mathematicallybased to forecast the final outcome of the project.

Final Estimates. As the design is completed a detailed pre-bid estimate can be prepared. At this stage the designcontingency would typically be reduced to zero: however, in some instances, there will still be risk surrounding theproject, which would make it prudent to still include a small bidding contingency. The estimate should be organized inthe same WBS as required of the bidders, which typically is CSI MasterFormat. This then allows for a comparison ofthe final estimate with the bids received and can aid in negotiating with the lowest bidder. In addition, having the finalestimate and bids in the same format facilitates developing cost databases for use in planning future projects. Thistypically means taking a CSI bid and re- sorting the data into a Uniformat WBS.

Estimating Methods

There are four primary methods used to estimate construction costs. Those methods are known as Project Comparison Estimating or Parametric Cost Estimating, Area & Volume Estimating, Assembly & System Estimating, and Unit Price &Schedule Estimating . Each method of estimating offers a level of confidence that is directly related to the amount oftime required to prepare the estimate (Fig. A).

Fig. A: Relative accuracy of estimate types (Courtesy of From Concept to BidSuccessful Estimating Methods by John D. Bledsoe)

Project Comparison Estimating or Parametric Cost Estimating is often used in early planning stages when littleinformation is known about the program other than overall project parameters. This method is sometimes called a"preliminary" or "ballpark" estimate and has no better than 15% to 25% accuracy. Project comparison estimating useshistorical information on total costs from past projects of similar building type. For example, the number of beds in ahospital, or number of spaces in a parking garage, or number of courtrooms in a courthouse can form the basis of aproject comparison estimate by comparing them to similar scope projects recently done in the same geographic region.

This estimating method requires the assumption of an approximate gross area for the proposed work and a sufficienthistorical record of similar building types. The greater the number of prior project combinations for which scope andprices are known, the easier it is to perform Project Comparison Estimating. Fig. B illustrates an example of regressionanalysis used to develop a project comparison estimate. The scattered points in the figure show the combinations of
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overall project size and cost. The line shown is the "best fit" of a linear relationship between size and construction costand may serve to predict a preliminary budget. The distances between the line and the points give a visual impressionof the statistical confidence of the estimate.

Fig. B: Project relative accuracy of estimate types (Courtesy of From Concept to BidSuccessful Estimating Methods by John D. Bledsoe)

Square Foot and Cubic Foot Estimates are another method of developing both preliminary and intermediate budgetsbased on historical data. This method is effective in preparing fairly accurate estimates if the design is developedenough to allow measurement and calculation of floor areas and volumes of the proposed spaces. There are severalhistorical databases available to support this method of estimating providing unit costs ($/S.F. & $/C.F.) that areadjusted annually and many of the large estimating firms maintain their own databases. More accurate estimates madewith this method make adjustments and additions for regional cost indices, local labor market rates, and interpolationbetween available cost tables. Further adjustments may be made to account for other unique aspects of the designsuch as special site conditions or design features being planned. In addition, the estimate can develop overall "coreand shell" costs along with Tenant Improvement build-out costs of different space types, allowing for relative ease ofdetermining the impact of changes to the program. Estimates made with this method can be expected to be within 5%to 15% accuracy.

Assembly and Systems Estimates are intermediate level estimates performed when design drawings are between10% and 75% complete. Assemblies or systems group the work of several trades or disciplines and/or work items intoa single unit for estimating purposes. For example, a foundation usually requires excavation, formwork, reinforcing,concreteincluding placement and finishand backfill. An Assembly and Systems estimate prices all of theseelements together by applying values available in assemblies cost data guides. These guides are based on historicaldatabases, typically organized in MasterFormat. Estimates made with this method can be expected to be within 10%accuracy.

In Unit Price and Schedule Estimating , the work is divided into the smallest possible work increments, and a "unitprice" is established for each piece. That unit price is then multiplied by the required quantity to find the cost for the

increment of work. This calculation is often called "extending". Finally, all costs are summed to obtain the totalestimated cost. For example, the cost to erect a masonry wall can be accurately determined by finding the number ofbricks required and estimating all costs related to delivering, storing, staging, cutting, installing, and cleaning the brickalong with related units of accessories such reinforcing ties, weep-holes, flashings, and the like. This method ofestimating provides the most accurate means of projecting construction costs, beyond which accuracy is more likely tobe affected by supply and demand forces in the current market.

Historical Databases and Estimating Software

There are several historical databases available that provide current values for estimating costs of the various units ofwork for a project. The databases are compiled from records of actual project costs, and on-going price quotationsfrom suppliers, and are published annually in the form of books, CDs, and computer-based extranets. There ishowever a danger of applying published data or software database pricing without first adjusting for the particularaspects of the project under consideration. In construction every project is unique, with a distinct set of local factors(such as size of project, desirability, level of competition, flexibility of specifications, work site, and hour restrictions, and


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so forth) that come into play in bidding. When an estimating system is used that is attached to a price database, theprofessional estimator should still review each line item price to determine if it is applicable to the project beingestimated. Blindly applying database prices can lead to inaccurate estimates and bid busts.

Location factors should also be applied only after first considering the project size and particular nature, to determinewhere the bidders will come from. If it is a large project in a small town, the location factor for that town likely will notapply as the bidders will be coming from elsewhere. The bids may as a result be much higher than the factor wouldindicate as the wages will be based on another location and the bidders may have to pay accommodation and travelcosts for some of their workers.

PRIVATE SECTORBNI(http://www.bni-books.com/)A popular publisher of cost estimating guides in the U.S.Marshall & Swiftoften used for insurance valuations.R.S. Means(http://www.rsmeans.com/)The most-used and most-quoted source with 25 different guides and unitprices for over 20,000 building components.

PUBLIC SECTORGeneral Construction Cost Review GuideUsed by the U.S. General Services Administration to performpreliminary planning/benchmark estimates of large capital construction projectsHistorical Cost Analysis Generator (HAG)Used by the Tri-Services to collect historical costs on awarded militaryconstruction projectsMCACES (Microcomputer-Aided Cost Engineering System)(http://www.sam.usace.army.mil/en/cost/encost.html)(U.S. Army Corps of Engineers)A multi-user software program used for preparation of detailed construction costestimates for military, civil works, and government facilities. The Commercial Unit Price Book (C-UPB) can beused with MCACES Gold Version 5.30.SUCCESS Estimator(/tools/success.php) (Tri-Services)An integrated estimating and cost management program.Includes: Unit Price Book Database (UPB) 2001, Parametric Cost Estimating Models (PCEM) version 5, PCEMData and PCEM Tutorial, Building Renovation Assemblies (BRA) 1.0, and Telecommunications Estimating System(TELECOM) 2.0.

WBDG

DESIGN OBJECTIVESCost-EffectiveUse Economic Analysis to Evaluate Design Alternatives(/design/use_analysis.php), Cost-EffectiveConsider Non-Monetary Benefits such as Aesthetics, Historic Preservation, Security, andSafety(/design/consider_benefits.php)

PRODUCTS AND SYSTEMS (/DESIGN/PRODUCTSSYSTEMS.PHP)

AssociationsAssociation for the Advancement of Cost Engineering (AACE)(http://www.aacei.org/)

American Society of Professional Estimators (ASPE)(http://www.aspenational.com/)

International Cost Engineering Council(http://www.icoste.org/)

Royal Institution of Chartered Surveyors (RICS)(http://www.rics.org)

Society of Cost Estimating and Analysis (SCEA)(http://www.sceaonline.net)

PublicationsBuilding News International website(http://www.bni-books.com/)

From Concept to BidSuccessful Estimating Methods by John D. Bledsoe, PhD, PE. Kingston, MA: R.S. MeansCompany, Inc., 1992.

GCCRGGeneral Construction Cost Review Guide

GSA Project Estimating Requirements

ADDITIONAL RESOURCES
http://www.bni-books.com/http://www.sceaonline.net/http://www.rics.org/http://www.icoste.org/http://www.aspenational.com/http://www.aacei.org/http://www.wbdg.org/design/productssystems.phphttp://www.wbdg.org/design/consider_benefits.phphttp://www.wbdg.org/design/use_analysis.phphttp://www.wbdg.org/tools/success.phphttp://www.sam.usace.army.mil/en/cost/encost.htmlhttp://www.rsmeans.com/http://www.bni-books.com/


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R.S. Means website(http://www.rsmeans.com/)

Otherse-office(http://www.hph-e-office.com/e-office/index.cfm)A comprehensive pricing service and businessmanagement software tool for contractors by Harrison Publishing House

ER 1110-3-1300 Military Programs Cost Engineering(/ccb/browse_doc.php?d=4926) by U.S. Army. 1999.

Historical Cost Analysis Generator (HAG)Used by the Tri-Services to collect historical costs on awarded militaryconstruction projects

Micro Computer-Aided Cost Engineering Systems (MCACES)(http://www.sam.usace.army.mil/en/cost/encost.html)by U.S. Army Corp of Engineers.

P-442 Economic Analysis Handbook(/ccb/browse_doc.php?d=4180) by NAVFAC. 1993.

SuccessEstimator(/tools/success.php) by Tri-Services.

TI 802-02 Construction Cost Estimates by U.S. Army.

National Institute of Building Sciences(http://www.nibs.org/) | An Authoritative Source of Innovative Solutions for the BuiltEnvironment

1090 Vermont Avenue, NW, Suite 700 | Washington, DC 20005-4950 | (202) 289-7800 | Fax (202) 289-1092 2010 National Institute of Building Sciences. All rights reserved. Disclaimer(/about.php)
http://www.wbdg.org/about.phphttp://www.nibs.org/http://www.wbdg.org/tools/success.phphttp://www.wbdg.org/ccb/browse_doc.php?d=4180http://www.sam.usace.army.mil/en/cost/encost.htmlhttp://www.wbdg.org/ccb/browse_doc.php?d=4926http://www.hph-e-office.com/e-office/index.cfmhttp://www.rsmeans.com/

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