Basic principles of estimating
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Basic Principles of Estimating. Estimating. A prediction of probable cost. Is figuring out how to put the pieces together in the most economical manner. Estimating is both art and science. Estimating (cont.). Identify and quantify the pieces-takeoff. Identify construction methods.

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Basic Principles of Estimating

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Basic principles of estimating

Basic Principles of Estimating


Estimating

Estimating

  • A prediction of probable cost.

  • Is figuring out how to put the pieces together in the most economical manner.

  • Estimating is both art and science.


Estimating cont

Estimating (cont.)

  • Identify and quantify the pieces-takeoff.

  • Identify construction methods.

  • Engineering - Will it be stable during construction?

  • Productivity


Bidding is not the same as estimating

Bidding is NOT the same as Estimating

  • Identify RISK

  • How do you get paid?


Successful estimating

Successful Estimating

  • Contractors are not in business to win bids.

  • Contractors are in business to make money.

  • Estimating is the base of a company’s success.


Estimating for profit

Estimating for Profit

  • Good estimating minimizes contractor’s risk and facilitates project management and defines the scope of work.

  • The estimate is the plan that furnishes the مجال field people with all the details in a controlled and prearranged format.


Estimating requires

Estimating Requires:

  • Skills

  • Effort

  • Above all, an organized system that will prevent errors and omissions اغفال.


Basic principles of estimating

  • Estimating is very expensive; therefore, we must use our time wisely and effectively if we are to be successful.


Cost of estimating

Cost of Estimating

Chart 1

55

ASimple project

BMedium complexity

CDifficult project

50

A

45

40

hours

B

35

30

25

C

20

15

10

100

200

300

400

500

Size of Project in Thousands of Dollars


Cost of estimating cont

Cost of Estimating (cont.)

Chart 2

170

AComplex

BMedium complexity

CSimple

160

A

150

140

130

B

120

hours

110

100

C

90

80

70

60

50

40

30

1.5

2.0

2.5

3.0

3.5

Size of Project in Millions of Dollars


Profit should correlate to risk

Profit Should Correlate to Risk

  • Job Comparison

    • Compare two jobs of identical direct cost, yet very diverse in overhead and risk factor:

  • Job “A”Job “B”

  • Material$200,000$100,000

  • Labor 20,000 230,000

  • Subcontractors 100,000 10,000

  • General Expenses 30,000 10,000

    • Subtotal350,000 350,000

  • Overhead @10% 35,000 35,000

  • Profit @10% 38,500 38,500

    • Selling Price$423,500$423,500


Profit should correlate to risk cont

Profit Should Correlate to Risk (cont.)

  • Job Comparison

# labor

7

7

7

6

6

5

5

5

5

5

5

4

week

1

2

3

4

5

6

7

8

9

10

11

12

12 weeks  65 labors

15

15

# labor

10

10

3

3

3

3

2

2

2

2

week

1

2

3

4

5

6

7

8

9

10

11

12

12 weeks  65 labors


Profit should correlate to risk cont1

Profit Should Correlate to Risk (cont.)

  • MaterialsLow to medium risk

  • LaborHigh risk

  • SubcontractorsLow risk

  • General ExpensesLow risk


Accuracy is critical for success

Accuracy is Critical for Success

  • A typical project can be broken down as follows:

    Material40-45%

    Labor35-40%

    Equipment Expenses8-10%

    Overhead10%

    Profit2%


Common estimating mistakes

Common Estimating Mistakes

  • Misread or misinterpreted specifications, drawing, or any other contract document

  • Takeoff omissions or overlaps

  • Missing quotesعدم تسعير بعض البنود

  • Estimating by unit prices

  • Using the percentage method to establish the cost of certain systems

  • Prorating indiscriminatelyترتيب مسبق بدون تمييز

  • Crumbling تفتيتunder pressure to procure work


Common estimating mistakes cont

Common Estimating Mistakes (cont.)

  • Cutting prices to meet or beat someone else’s quote

  • Underestimating the complexity of a project

  • Expecting an excessive amount of favorable changes

  • Overemphasizingمغالاة بالتوكيد volume purchasing

  • Undertaking a project with incomplete bid documents

    • Scaling drawings


How to improve your estimating procedure

How to Improve your Estimating Procedure

  • Company labor tables and current material prices should be stored in your database.

  • Manual estimating is not cost effective and it is subject to more errors and omissions.

  • Computerized estimating should automate and expedite..يفعل بسرعة the manual estimating process.

  • Establish the company labor unit sand labor factoring tables.

  • Maintain current material pricing.

  • Establish an estimate review procedure.


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