Construction Cost Estimating

Overview: Construction estimating is the compilation and analysis of the many items that influence and contribute to the project. Estimating is done before work begins and requires evaluation of bidding documents and site conditions.  Estimating is a fluid process and there are as many different estimating procedures as their are contractors.  As with anything else in today's world, technology is vital to construction cost estimating.  The following discusses some basic aspects of construction estimating.

Lump Sum Estimates: Through this process, a fixed price is compiled, for which the contractor agrees to perform a prescribed package of work in full accordance with the drawings and specifications.  The contractor agrees to carry out its responsibilities even though the cost may prove greater than the stipulated amount.  This type of estimate is is applicable only when the nature of the work and the quantities involved are well defined by the bidding documents.  Lump sum estimating requires that "quantity surveys" or "quantity takeoffs" be made.  This would be a complete listing of all the materials and items of work that will be required.  Using these quantities as a basis, the contractor computes the costs of the materials, labor, equipment, subcontracts, overhead, contract bond and tax.  The sum total of these individual estimates constitutes the anticipated overallcost of construction.  A mark-upwill be added onto this number to derive the lump-sum estimate the contractor will bid as its price for doing the work.

Unit Price Estimates:  Unit price estimates can be compiled when quantities of work items may not be precisely determinable, but the nature of the work is well defined.  Price estimates are derived for each bid item for a particular job.  Quantity surveys, similar to those in the lump sum process, for each bid item.  The total project cost is arrived at by adding the totals of each of these amounts, but all estimated costs will be kept segregated by bid item to which they apply.

What is RS Means?:  RS Means is a division of Reed Business Information that provides cost information to the construction industry so contractors in the industry can provide accurate estimates and projections for their project costs. RS Means has become a data standard for government work in terms of pricing, and is widely used by the industry as a whole. RS Means is accessible online and it also integrated in a variety of cost estimating software packages to allow for fast and reliable estimating. Cost information is updated annually and is available online, via CD-Rom, or in book form.