Construction Cost Estimating - The Estimating Process

Summary

In this course, led by experienced project engineer Tim, participants learn the intricacies of construction cost estimating and management. The course covers the process of estimating direct and indirect costs, using software tools, and ensuring accurate budgeting for major infrastructure projects. With a focus on practical skills, the course aims to equip students with the expertise to excel in construction management, featuring comprehensive content and hands-on activities.

Takeaways

• 🏗️ The course is designed for those interested in understanding the budgeting process for major construction projects.
• 👨‍🏫 Tim, the project engineer with extensive experience, teaches fundamental construction management skills.
• 🎓 The course includes hours of content and practice activities to equip students with essential job skills.
• 💡 The video is an extract from a course on construction cost estimating and management, focusing on the estimating process.
• 🔍 Direct costs form the bulk of project costs, usually over 70%, and include labor, materials, and subcontract costs.
• 📊 Estimating direct costs involves understanding the scope, establishing delivery methodology, and estimating costs.
• 🔄 The estimating process is iterative, with results from one step potentially impacting previous steps.
• 🛠️ For indirect costs, which include preliminaries, overheads, and risk, a different estimating process is used.
• 💼 A project organization chart is essential for determining overhead costs, including staff salaries and insurances.
• 📈 Cash flow analysis is crucial to ensure the project remains cash positive and to strategically fill out the pricing schedule.
• 💻 Estimating is often done in purpose-built software like Caddy, but for this course, Microsoft Excel is used for demonstration.

Q & A

What is the main focus of the course mentioned in the transcript?

The main focus of the course is teaching fundamental construction management skills, specifically construction cost estimating and management, to engineers and other construction management professionals.

Who is the instructor of the course?

The instructor of the course is Tim, a project engineer with extensive experience in the design and construction of major infrastructure projects.

What types of costs are discussed in the course?

The course discusses direct and indirect costs, including preliminaries, overheads, risk, and opportunity costs.

What is the first step in the estimating process according to the transcript?

The first step in the estimating process is to determine direct costs, which typically form the bulk of the project costs.

How are direct costs estimated in the construction project?

Direct costs are estimated by developing a work breakdown structure, determining the work required to complete the project, quantifying the costs for each scope item including labor, materials, and subcontract costs.

What is the importance of understanding the scope in direct cost estimating?

Understanding the scope is crucial as it involves creating the work breakdown structure and identifying all the unique project deliverables, which are then summarized into work packages.

What is the role of the delivery methodology in the estimating process?

The delivery methodology is essential as it involves how the required work will be completed, including developing the construction methodology, which is heavily related to procurement and the development of the project schedule.

How are indirect costs determined in the course?

Indirect costs are determined by quantifying preliminary costs, estimating overhead costs by creating a project organization chart, and determining the contingency needed by developing a risk and opportunity register.

What is the significance of the cash flow analysis in the estimating process?

The cash flow analysis is significant as it ensures the project remains cash positive, meaning revenue will cover costs, by strategically filling out the pricing schedule.

What tools are typically used for estimating in construction projects?

Estimates are usually done in purpose-built estimating software like Caddy, but for the course, they will use Microsoft Excel due to its accessibility for building up cost estimates.

Why is it important to review and summarize the estimate before submission?

Reviewing and summarizing the estimate is important to ensure accuracy, get approval from upper management, and have the estimate independently reviewed. This process helps to avoid underestimating costs which could lead to significant financial losses.