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Contents

Section 1 Estimating

Section 2 Estimating Process

Section 3 Bills of Quantity Format

Section 4 The Estimators Cost Calculations
                                             


 

Description: The purpose of this unit is to enable you to build up an estimate for a building services engineering project using appropriate principles and procedures.

Author:  Gates MacBain Associates


Section 1  Estimating




Aims and Objectives

At the end of this section you should be able to:
  • State the factors which need to be considered prior to the production of an estimate.


Estimating is a complex and through process by which the cost of carrying out a quantified work activity can be established using historical data, synthesis of the activity and computer generated software.  

It should be understood that the contract estimate produced by the Estimator in conjunction with the pre-contract Tendering team is their assessment of the cost of a contract; this has been derived from the information provided by the Client to the Architect and Quantity Surveyor and research, investigations and planning carried out by the team. This will include processes and document production which will assist the estimator to establish a cost to complete the project.  They include amongst others: 
  • Risk assessments
  • Site investigation
  • Resource availability
  • Contract programme
  • Subcontract availability
  • The drawings and specification
  • Preliminaries and individual site conditions and location
  • Form of Contract and requirements
  • Prime Costs and Provisional Sums
This list is by no means exhaustive and many forms and documents are produced according to the magnitude and complexity of the project and the resources available. 

Details on these can be found in the constructionsite units listed below and by searching in the Index on this site. The publications listed within in these units will provide useful background reading. 

The underlying principles of Estimating and Tendering can be found in the CIOB publication– Code of Estimating Practice Section 2 as indicated below. 

The publication Estimating and Tendering for Construction Work indicated below provides guidance on the use of such things as method statements (Chapter 9) and site investigating (Chapter 7) in the estimating process. 

Similarly the Preliminaries and PC and PS sums and their cost implications are considered in the CIOB Code of Estimating Practice Chapter 6. 

The publication- Contractual Procedures in the Construction Industry considers in Section 21 to 34 inclusive the contractual implications which must be incorporated into the estimate. 



Constructionsite Units





Publications

  • CIOB. (2009) Code of Estimating Practice, Wiley Blackwell; Oxford
  • Brook M. (2010) Estimating and Tendering for Construction Work,  Elserier; Oxford
  • Ashworth A (1996) Contractual Procedures in The Construction Industry. Longman; Harlow




Self-Assessment Task

  • Discuss the factors which must be determined prior to the production of an estimate.





Section 2  Estimating Process



Aims and Objectives

At the end of this section you should be able to:
  • Explain the estimating process and factors which will affect estimating and tendering decisions.

When the Designer/Architect has produced the drawings for a building these are passed to the Quantity Surveyor who will prepare the Bill of Quantities. This is a document which lists the items and describes the work that is to be done in order to construct the building.  It specifies the details of each operation and itemises the materials, parts and labour for each operation, it will also include preliminaries, material specification details about the form of contract, P.C. and P.S. inclusion and other factors which will affect how the work will be carried out and the quality and allowances to be incorporated. 

Once the document has been prepared it is sent to the companies who are invited to tender for the contract.  Each company who wishes to tender will then cost each of the items in order to obtain an overall estimate.   

Before a company decides to submit a tender for a contract they need to decide if they wish to price the contract, taking into account all relevant factors, and finally determine what profit they expect, before turning the estimate into a tender. Estimators need to keep up to date with the factors which will influence costs such as plant, materials and labour availability.  

The estimating process incorporates decisions about:
  • equipment needs
  • sequence of operations
  • number of workers required
  • physical constraints at the site
  • conditions of contract  

Allowances must be made for wastage of materials, inclement weather, or any other factors that may increase costs.  These will need to be incorporated into the estimate. Once these factors have been considered the estimator will produce a cost summary for the contract and include profit and overheads; and move the process on to the tender production stage. 

Further details relating to the estimating process can be found in the publications listed below. 

Large companies may have specialist estimators for specific areas i.e. mechanical services. Estimating may be completed by the use of computer software packages, a review of which can be found at the website below.   

Research by the RICS suggests that nearly 80% of Tender documents are still sent as hard copy, although increasingly more are being sent by electronic mean.   



Websites



Publications

  • CIOB. (2009) Code of Estimating Practice, Wiley Blackwell; Oxford
  • Brook M. (2010) Estimating and Tendering for Construction Work,  Elserier; Oxford
  • Ashworth A (1996) Contractual Procedures in The Construction Industry. Harlow Longman.
  • A.A Kwayke (2003) Understanding Tendering and Estimating; Ashgate: Aldershot
  • Thompson, A (1998) Architectural Design Procedures, Arnold: London (Chapter 9)
  • Harris, F & MacCaffer, R, (2005) Modern Construction Management 5th Edn. Oxford: Blackwell (Chapter 5)




Self-Assessment Task

  • Discuss the factors which will affect the estimating process.






Section 3  Bills of Quantity Format




Aims and Objectives

At the end of this section you should be able to:

  • Explain the taking off procedure for an aspect of an element of a project.


The Estimators Tender Report will detail how each of the items shown in the previous chapter and other factors have been considered, it will also take into account their importance and relevance and how these factors have been incorporated into the Estimators pricing of the contract. 

The initial ‘take off’ content within any contract is vital and whilst various systems of approximate estimating exist, (details of which can be found by visiting the constructionsite unit link below) none can be as accurate as using the Standard Method of Measurement (SMM) approved and accepted by professional Quantity Surveyors and the Royal Institute of Chartered Surveyors, (RICS).   

Approximate estimating techniques are considered in the CIOB Code of Estimating Practice, Chapter 10 and in Estimating and Tendering for Construction Works, Chapter 5 – various other references to approximate estimating can be found in both of these publications. 

SMM ensures that each item of measured work is divided into trade or element headings in accordance with the rules for the use of SMM; it provides a standard method of providing and presenting measured building works and thus allows accurate Bills of Quantity to be produced. This means that each contractor tendering for the work is doing so with exactly the same information. 

The fact that all measured work is quantified according to the rules of SMM allows the Estimator to accurately assess the work to be completed within the measured work section. However it should be understood that many forms of contract and tendering procedures exist within the construction industry and the comments within most text books and publications refer to The JCT Form of Contract. Domestic Sub Contractors and Nominated Sub Contractors have their own form of contract based upon the relevant JCT format used for the main contract. 

Contractors may use alternative systems to ‘take off’ work content where Package Deals, Turnkey or similar contracts are being Tendered for or negotiated but inevitably some form of Bills of Quantity will be required for price determination and valuation purposes. 

Being realistic in the form and amount of work output whether referring to machine or person is vital if the contract is to be won and return to a profit. 

The Estimator will complete the Bills of Quantity by reference to the information produce by the ‘Tender Team’, in essence by placing a price against every work item within the Bills of Quantity and multiplying this by the quantity of the item priced. The page is then added and taken to ‘the Summary’ where additional Bills of Quantity items such as Preliminaries, Prime Cost, Provisional Sums, Contingency Items, etc as applicable to the individual contract are included.  

Tender documentation including Drawings, Specification, Bills of Quantity, SMM, CESMM and other Tender documents are considered in Chapter 4 of Estimating and Tendering for Construction works.   

The addition of all of the summary pages will produce the Estimators cost price for the contract but the cost price is not necessarily the tender figure. 




Publications

  • CIOB. (2009) Code of Estimating Practice, Wiley Blackwell; Oxford
  • Brook M. (2010) Estimating and Tendering for Construction Work,  Elserier; Oxford
  • Ashworth A (1996) Contractual Procedures in the Construction Industry. Longman: Harlow



Self-Assessment Task

  • Produce an example of the layout for taking off an aspect of an element of a project.





Section 4  The Estimators Cost Calculations




Aims and Objectives

At the end of this section you should be able to:
  • Explain the procedure for the production of a costing for a contract.

The Estimator should possess the knowledge and understanding of the work items (as detailed within SMM) in order to be able to place accurate figures against each of the Bills of Quantity measured work items and/or to be able to complete the costing of the preliminaries and other such items.  The Estimator will also carefully consider the information provided by the Tendering team and incorporate this into the unit rates. 

Whist computer estimating programs are available (See the website Estimating Software Reviews listed for an assessment of some of these), and the use of price books (such as Spons or Wessex), historical data retained by the Estimator and company are aids and checks on accuracy; much of the Estimators role will depend upon his experience and ability to calculate accurately ‘Unit Rates’. 

The price book used will depend on the area of work being undertaken as books are specific to the type of work (See website Online Bookshop listed below).  


Units Rates 

Units Rates are rates per unit of measured work within the Bills of Quantity, they are described in terms of Lm, M2, M3, Tonnes, Item, etc; all complying with the rules of SMM; for each unit of measured work the Estimator includes a price at which he/she considers that the work can be completed.  

The unit rate will include whatever the Estimator considers necessary and appropriate, it is important that the unit rate ‘build up’ is transparent to all who may wish to use the unit rate at a later date; this could be to extract and analyse various parts of the ‘cost build up’ to establish items such as, labour content, labour output constant, material costs, waste factors etc.   

The basic inclusions in the ‘unit rate’, will be:
  • Materials
  • Waste on Materials
  • Labour in the form of an output constant multiplied by the craft persons ‘all in’ rate
  • Plant  (Specialist plant identified for a specific work item may be included within the unit rate but may be itemised at the end of the Bills of Quantity section in which the description of the work was present; general plant may be described within the preliminaries)
  • Overheads
  • Profit
 
Price books and computer software used for estimating purpose provide an excellent source of information, in particular to confirm or query the Estimators labour constants but all such information should be taken as a guide only and not used without interpretation of the constraints and opportunities identified by the Tender team as applicable to the individual tender and contract under consideration.  


Labour Constants  

The establishment of accurate ‘labour constants’ is vital to the accuracy of the calculation of the unit rate; indeed the accuracy of the Estimators calculation of labour output could be considered to be central to the accuracy of the estimate and tender figure itself.  In addition to determining the cost of the contract to the contractor the labour constant will determine amongst other factors the programme durations for the contract and hence cash flow.  

The Estimator must use all the information and expertise available to ensure the accuracy of the labour constant as far as it reasonably practical to achieve this objective.  


Cost Estimate not Tender Figure 

After all the work which has gone into the production of the Estimate for a contract it should be remembered that the Estimators price to complete the contract is not the Tender Figure/ Price which will be submitted to the Client, it is purely the cost of carrying out the work in the view of the Estimator and the Tendering team.  The actual Tender Figure/Price; the amount to be quoted to the Client which will secure the contract for the company will be subject to a process usually referred to as: Completing the Estimate and Final Tender Review, Adjudication or Settlement, a process by which the company take into account factors which will enhance their chances of success or diminish these; it will also consider the amount of work they currently have and the importance of gaining the contract,  only then will a Tender Figure/Price be established.  

The adjudication or settlement process is considered in the constructionsite unit Production of Estimates (140) and Tendering and Contractual Arrangements (141).  

Unit rate pricing is considered within Estimating and Tendering for construction Work Chapter 11 and the CIOB publication Code of Estimating Practice Chapter 6. The index of both of these publications should be consulted as the theme is returned to in several other sections of these publications.  The publication ‘Understanding Tendering and Estimating’ considers unit rate calculations and the factors affecting estimating decisions.   




Websites



Publications

  • CIOB. (2009) Code of Estimating Practice, Wiley Blackwell
  • Brook M. (2010) Estimating and Tendering for Construction Work,  Elserier.
  • Ashworth A (1996) Contractual Procedures in The Construction Industry. Harlow Longman.
  • A.A Kwayke (2003) Understanding Tendering and Estimating; Ashgate: Aldershot



Self-Assessment Task

  • Explain the process involved with the costing of a project.





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