Estimation�in Construction

Dr Adewale Abimbola, FHEA, GMICE.

www.edulibrary.co.uk

Aim: �Estimation in Construction

Objectives: At the end of the lesson, the students should be able to:

Introduction

• Estimation in construction is a method for calculating the likely cost of a project before it begins,.
• Estimation = Measurement + Rates.
• Measurement involves systematically quantifying project items using established rules (NRM, CESMM), creating a structured approach for drafting take-off lists and Bill of Quantities (BQ).
• Successful estimation demands comprehensive knowledge of construction processes, material and labour costs, alongside expertise, experience, foresight, and sound judgment.
• A reliable construction job estimate is an informed prediction of potential costs, derived from detailed plans and specifications.
• An effective estimate should align closely with actual costs upon completion, typically within a 5 to 10% variance, barring extraordinary or unforeseen events.

Estimation - Importance

• Estimating is crucial for determining the preliminary cost of a project, helping in assessing its financial viability and securing necessary funds if the project is greenlit.
• Estimating is vital for preparing tenders, overseeing contractors' work, and ensuring accurate payments during and after project completion.
• Detailed estimation breaks down the quantities of various work items, aiding in resource allocation, activity planning, and overall project scheduling.

Estimation Methods

• There are two major methods of estimation in the construction industry (Brooks, 2008):
• Single-rate methods.
• These are the functional unit and superficial floor area methods.
• Multiple-rate methods.
• These are the elemental cost plan, approximate quantities, and analytical & operational pricing of bills of quantities.
• Only the superficial floor area and the elemental cost plan methods will be considered in this course.

Estimating Methods

Superficial Estimating Method

• This approach involves determining the likely cost of projects by measuring the total internal floor space of the buildings, bordered by the interior sides of external walls, and then multiplying this area by a predetermined cost per square metre.
• This technique is straightforward and quick to apply, offering a fast way to estimate project expenses.

Superficial Estimating Method

• Important considerations in SPON’S A&B 2022
• Tender Price Indices (TPI):
• •Tender price indices represent the price for which the contractor offers to do the project for, i.e. cost to client.
• •They consider market considerations such as the availability of labour and materials, and the prevailing economic situation.
• (Page 52)

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Table 1. Tender price indices (AECOM Ltd, 2022)

Superficial Estimating Method

• Important considerations in SPON’S A&B 2022
• Location Factor:
• Prices throughout the book are at a price level index of 132 for Outer London (location factor = 1.00).
• (Page 57)

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Figure 1. Location factor (AECOM Ltd, 2022)

Key terminology:

Gross Internal Floor Area (GIFA or GIA): this is the area of a building measured to the internal face of the perimeter walls at each floor level.

Consult: https://www.designingbuildings.co.uk/wiki/Gross_internal_area_GIA for more information.

Worked Example 1

Three storey semi-detached housing

Floor area = 102 m²

Cost plan prepared with current TPI = 132

Start on site March 2023, TPI = 126.7 (Table 1)

Location: Wales = 0.86 (adjustment = -14%) (Fig. 1)

From Building Prices per Square Metre = £1,675 per m² (pg, 87)

Professional fees such as QS, architects, Town and County Planning fees, etc., and other facilitating type costs such as demolition, external works, car parking, bringing services to site, etc. are not included in the rate above. These will need to be considered separately.

Worked Example 2

A refurbishment of a sixth form college

Floor area = 3,000 m²

Cost plan prepared with current TPI = 132

Start on site October 2023, TPI = 130 (Table 1)

Location: East Midlands = 0.87 (adjustment = -13%) (Fig. 1)

Assumption: The lower cost range is employed to account for the refurbishment work. From Building Prices per Square Metre = £1,650 per m²(p. 86)

Professional fees such as QS, architects, Town and County Planning fees, etc., and other facilitating type costs such as demolition, external works, car parking, bringing services to site, etc. are not included in the rate above. These will need to be considered separately.

Worked Example 2 - Additional information

• The total order of cost estimate does not account for existing fittings and finishes that will be reused, the building services that will be retained, existing foundation, etc.
• Also, the total order of cost estimate does not include the professional fees such as QS, architects, Town and County Planning fees, etc., and other facilitating type costs such as demolition, external works, car parking, bringing services to site, etc. are not included in the rate above. These will need to be considered separately (AECOM ltd., 2022).
• According to Costmodelling Limited (2024), professional fees can be anything from 5% to 15% depending on the size of the project, and external works can be between 10 and 20% of the building cost.

Self-assessment Task 1

Using the Building Prices per Square Metre method in Spon’s A&B price book 2022, produce the upper range of the total order of cost estimate for the conference centre refurbishment project in Cardiff, Wales.

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Additional information

Total gross internal floor area = 2,330 m².

Cost plan prepared with current TPI = 132.

Start on site (Refer to your project programme – start of stage 5).

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Note: state all the assumptions involved in this calculation

Hint:

Estimating Methods

Elemental Cost Plan Estimating Method

• An element in construction is a component that consistently serves the same purpose in different types of buildings, such as the substructure, external walls, or roof.
• The Elemental Method is a technique for analysing and comparing building costs. It utilises data from a bill of quantities or similar project and cost data sources.
• In this method, costs of these elements, known as elemental costs, are standardised and presented as cost per square metre of the building's gross internal floor area.

Worked Example 3

The government announced huge funding for academies, sixth-form colleges and voluntary aided schools across Wales to transform facilities and improve school buildings. The is part of the government’s stimulus package, which is hoped to jump-start the construction activity. Use the Building Cost Models in Spon’s A&B price book 2022 to produce the cost estimate for the refurbishment of a sixth-form college in South Wales.

Additional information

Total gross internal floor area = 3,000 m².

Start on site December 2023, TPI = 130 (Table 1)

Solution:

The building cost model in the Building Cost Models in Spon’s A&B price book 2022 is for a project in the North East of England.

The elemental cost information was prepared with a TPI of 110 and a location factor of 0.83.

Location factor in Wales = 0.86 (Fig. 1)

Worked Example 3 - Solution

Worked Example 3 - Solution

The prices do not include Value Added Tax or professional services fees.

Self-assessment Task

The government announced huge funding for higher education institutions across Wales to transform facilities and improve school buildings. The is part of the government’s stimulus package, which is hoped to improve energy efficiency of old buildings and meet its Net Zero agenda by 2050. Use the Building Cost Models in Spon’s A&B price book 2022 to produce the cost estimate for the refurbishment of a higher education institution in Cardiff, Wales.

Additional information

Total gross internal floor area = 2,330 m².

Start on site: refer to your project programme.

Hint: AECOM Ltd. (2022, p. 104)

References/Bibliography

AECOM Ltd (2022) Spon’s Architects’ and Builders’ Price Book. 147th edn. Oxon: Taylor & Francis.

Brooks, M. (2008) Estimating and tendering for construction work. 4^th edn. London: Routledge.

Cartlidge, D. (2009) Quantity surveyor’s pocket book. Oxford: Elsevier Ltd.

Costmodelling Limited (2024) Typical uk construction costs of buildings. Available at: https://costmodelling.com/building-costs (Accessed:23 January 2024).

Lee, S., Trench, W. and Willis, A. (2005) Willis’s elements of quantity surveying. 10th edn. Oxford: Blackwell Publishing.

Potter, B. (2021) Construction Cost Breakdown and Partial Industrialization. Constr. Physic. Available online: https://www.construction-physics.com/p/construction-cost-breakdown-and-partial (Accessed: 23 January 2024).

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