Building up an Estimate (110)
Gates MacBain Associates
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.
Table of Contents
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 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:
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)
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.
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.
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
- Explain the process involved with the costing of a project.