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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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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.



Cost of estimating
Cost of Estimating time wisely and effectively if we are to be successful.

Chart 1

55

A Simple project

B Medium complexity

C Difficult 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.) time wisely and effectively if we are to be successful.

Chart 2

170

A Complex

B Medium complexity

C Simple

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 time wisely and effectively if we are to be successful.

  • 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.) time wisely and effectively if we are to be successful.

  • 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.) time wisely and effectively if we are to be successful.

  • Materials Low to medium risk

  • Labor High risk

  • Subcontractors Low risk

  • General Expenses Low risk


Accuracy is critical for success
Accuracy is Critical for Success time wisely and effectively if we are to be successful.

  • A typical project can be broken down as follows:

    Material 40-45%

    Labor 35-40%

    Equipment Expenses 8-10%

    Overhead 10%

    Profit 2%


Common estimating mistakes
Common Estimating Mistakes time wisely and effectively if we are to be successful.

  • 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.) time wisely and effectively if we are to be successful.

  • 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 time wisely and effectively if we are to be successful.

  • 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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