Cost estimation helps the investors in determining the flexibility and viability of the project and makes them aware of how much this project is going to be progressing.
Cost estimation is done to make sure that the project can be accomplished feasibly with all the scopes being met. This helps the contractor whether to bid on a project or not. A good cost estimation keeps the money of the builders saved. If you want to read the article Stakeholder Register template, here is the link
It is very important to focus on the accuracy of the cost estimation if any error occurs in the estimation this will lead you towards a great disaster. There are several factors on which the accuracy of the estimation depends which are
- Quality of the plan-making
- The level to which the project is defined by the estimator
- The expertise and abilities of the estimator
- The accuracy and quality of equipment used by the estimator
It helps to avoid any confusion in the payments. To make all this work feasible this template is a good choice to manage all these tasks that are mainly related to earned value management.
What are the Key Benefits of a Cost Estimation?
- It helps allocate the budget to the project manager.
- This template is helpful for contractors to decide whether to bid on the project or not.
- It is helpful for the architects and engineers to determine whether the project is meeting the scope or not.
- This is also helpful in keeping the money of the builders safe and helps in avoiding any confusion related to the payments
- An accurate construction cost estimate leads you toward a successful project.
- Cost Management Plan Template
All these factors together make an accurate estimation which is very healthful for the business.
Types of Cost Estimates in Construction
To confirm the accuracy of the estimate, multiple estimates should be made during the pre-designing phase. These types of estimates are discussed below
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Level 1: Order Of Magnitude Estimate
It is constructed at the very start and is helpful in determining the feasibility of the project.
Level 2: Schematic Design Template
This estimate produces by the schematic design.
Level 3: Design Development Estimate
The estimate produces during the design development phase is called the design development phase.
Level-4: Construction Document Estimate
This estimate produces in line with the designs and specifications of the construction
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Level-5: Bid Estimate
This estimate is produced according to the information in the construction document and is made by the contractors. It serves as a base for a bid price that offers to the customer.
Categories Of Construction Cost Template
There are three main categories of the cost estimate
Design Estimate
This is done during the pre-designing phase and is also known as a screening estimate. It determines the viability of the construction. The next one is the preliminary phase that made according to the schematic design. Then the detail estimate makes in the design development phase. Finally, the last estimate makes by engineers according to the information in the construction document.
Bid Estimate
The constructor makes a lot of research before bidding on any project. He gets data from different resources like direct cost, supervision cost, etc.
Control Estimate
After signing the contract with the contractor, infect this estimation is made before the construction work and is helpful in maintaining and controlling all the costs of the work. It helps in accomplishing the construction work within the estimated cost.
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Elements of Construction Cost Estimate
There are different elements that make up a construction cost estimate template look presentable and effective. Without there element, a good template cannot be made. Elements of this template are discussed below
Material
It measures the quantity of material in the pre-construction phase.
Labor hour
It is the unit for the work that gives the estimation of the output of one worker who is working for one hour.
Labor rate
This is the amount of money paid to the worker for one hour of work. It includes the overtime payment as well.
Cost of Material
The cost of the material varies as the market fluctuates so this should be prioritized.
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Equipment Cost
It includes the cost of heavy machinery that is rented for construction purposes like cranes and cement mixer etc. equipment is the major factor in the construction business. How quickly your work is going to finish greatly depends upon the efficiency of the equipment.
Sub-Contractor Quotes
More than one contractor hires for the accuracy of the cost estimate, so all of their quotes add to the contractor’s total estimate.
Additional Costs
These costs are not directly related to construction for example the transport cost, administrative cost, etc.
Profit
A margin is made in the cost by the contractor in order to make a profit.
Escalation
These are the natural inflation of cost with the passage of time. These must consider in long-term projects.
Bonds
This acts as a guarantee of delivery. The performances bond makes you aware of if the contractor is able to construct according to the contract signed or not.
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Steps To Create Construction Cost Estimate Template
This template serves as a crucial tool in project management. It helps project managers plan, budget, and control costs efficiently. Follow these steps to create this template:
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Define Project Scope:
- Clearly outline the project’s goals, deliverables, and tasks.
- Detail all activities involved, from initial planning to final inspection.
- Identify the stakeholders and their roles in the project.
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Gather Detailed Requirements:
- Collect all necessary data, including project specifications, design plans, and regulatory requirements.
- Consult with architects, engineers, and contractors to ensure comprehensive requirements.
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Break Down Work Structure:
- Divide the project into smaller, manageable sections or work packages.
- Each work package should include specific tasks, materials, labor, and equipment.
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Estimate Quantities:
- Calculate the quantities of materials and resources needed for each work package.
- Use historical data, industry standards, and expert judgment for accurate estimates.
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Determine Unit Costs:
- Identify the unit cost for each material, labor, and equipment involved.
- Consider market rates, supplier quotes, and past project data for reliable unit costs.
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Calculate Total Costs:
- Multiply the quantities by their respective unit costs for each work package.
- Sum the costs of all work packages to get the total project cost estimate.
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Include Contingencies:
- Add a contingency allowance to cover unexpected costs and risks.
- Typically, contingencies range from 5% to 10% of the total project cost.
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Review and Validate:
- Review the cost estimate with project stakeholders, including the project team and financial experts.
- Validate the estimate against similar past projects to ensure accuracy.
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Document Assumptions:
- Clearly document all assumptions made during the estimating process.
- Include any constraints, exclusions, and specific conditions that might impact the cost.
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Format the Template:
- Design a user-friendly format for the template, making it easy to update and track.
- Include sections for item descriptions, quantities, unit costs, total costs, and notes.
Conclusion:
Creating this template involves systematic planning and detailed analysis. Its role in project management is indispensable for budgeting, cost control, resource allocation, risk management, and communication.
Outsource References: Construction Cost Template
