Conceptual Cost Estimating

1. Design Stage 1 Preconstruction Stage 2: Procurement Conceptual Planning Stage3: Construction Stage 4: Project Close-out Conceptual Cost Estimating Topic 3 Chapter 4 Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

2. Lecture Outline • We are still in the conceptual phase • The owner selected the site, the scope, decided on type of contracts, and hired a Consultant, and or a CM. • To take a GO/ NO GO decision, the owner needs a rough estimate of the cost of the project • So far, no design documents are available, not even the floor area of the structure. • Available information is of the type: nice motel of 50 rooms, two story house of such quality, parking garage that can park 400 cars. • A conceptual estimate will provide that rough estimate of cost Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

3. Estimating Fundamentals • Why and when to estimate • conceptual phase: conceptual estimating • schematic and design development phases: square foot and assemblies estimating • procurement phase: detailed estimating. Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

4. Estimating Fundamentals Estimate considerations • project size: larger projects are more expensive. Figure 4-2 and learning curves. Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

5. To adjust for size, use table in Figure 5-3 page L7-1, or page 108 of the book • compute the size factor = proposed area/typical area • From the graph, get the cost multiplier at the size factor • multiply the cost by the cost multiplier. • project quality: figure 4-4. • location: taken into consideration by location indices.

6. Figure 5-3 Project size multiplier

7. time: cost need to be projected to payment time fig 4.5 page L-68 Present cost at city (X) = former cost at (X) x present historical index at (X) former index at (X) cost at any city at a given time/historical cost index at that city at that time = constant For example, a building that cost $1,000,000 in Seattle in 1965 will cost in 2003 in Seattle= 1,000,000 (100/16.6) = $ 6,024,096 Historical Cost Index (page L-68) Pay attention to location factors if needed. • other factors: economic situation, relationship with owner owner Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

8. Figure 4-5: historical cost index

9. Conceptual Estimate (ROM) • Also called rough order of magnitude (ROM). • Commonly used to determine approximate costs of projects or subsystems within a project, most commonly in building construction. • Can be quite general or very detailed, according to the level of details shown in the drawings, if any. • Similar to any pre-construction estimate, prepared by the owner, designer, and/or CM. • Can be done in minutes and provide accuracy in the ±20% range. • Can be done in many ways. A base cost is obtained, from guides?, and then modified for location, size, and time if necessary

10. Cost Estimating Guide Books • Cost Estimating guides differ in the level of details and cost. • different guides are available for different specialties and different parts of the country. • We will use material from R. S. Means Inc. • The estimate covers the cost of construction, plus overhead and profit, but not the price of land or cost of demolition. Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

11. Conceptual cost estimating using Means guides 1) Parameter Estimates It relates the total cost to few physical measures (parameters) that reflect the size or scope of the project. Examples • Estimate of the cost of a school by multiplying the area by the unit price based on area. • A parking garage estimate based on the number of cars Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

12. Examples 1) Using Means Assembles Cost Data 2003, Estimate the cost of constructing a 50 units high quality motel in Pittsburg, Tampa FL, or New York NY in January 2003? Answer a) basic cost: from table K1010 000, figure 5-1 (L-69), line 590-9000: cost per unit ( high quality-- use column 3/4) = $51,500 total base cost = 50 units X $51,500 = $2,575,000 Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

13. Figure 5-1

14. Examples b) adjustment for size: from table K1010-031 figure 5-2(L-70): - typical high quality motel unit gross area = 620 SF gross area of the motel = 50 X 620 = 31,000 SF, consider that your “ proposed area”. Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

16. - from the table in figure 5-3 (L-71) typical total size of the motel is 40,000 SF size factor = proposed building area/ typical building area = 31,000 / 40,000 = 0.775

17. Figure 5-3 Project size multiplier

18. from the graph in figure 5-3, cost multiplier at size factor = 0.775 is 1.04. cost adjusted for size = $2,575,000 X 1.04 = $2,678,000 the cost increased because the unit cost goes up as the project size goes down. The base cost was for a motel of a larger size. c) adjustment for location: the base cost assumes the national average. City index is obtained from the table in figure 5-4 page L- 72 in general: adjusted cost for city = estimated cost X city index /100 Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

19. Figure 5-4

20. city index for New York is 132.6, for Tampa is 80.3, for Pittsburg is 100.2 New York City cost = $3,551,028 cost at Tampa = $2,150,434 cost at Pittsburg = $2,678,535 2) What is the cost to build that motel in NY today? Answer Assuming 2.6% per year, what is the cost today? 3) What was the cost to build that motel in NY in 1955? Use “Historical Cost Indexes” Figure (4-5) page L-68 where, past project cost/index past year = project cost in 2003 /index 2003 project cost in 1955 = $3,551,028 X 12.7/100 = $ 450,980 Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

21. Figure 4-5