Civil Engineering Project and Cost Management

Civil Engineering Cost Estimaing

Lecture 1
Approximate Estimating and
Preliminary Estimating
Asoka Perera
Professor of Civil Engineering
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Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.1
Cost planning and control
The application of management techniques to control civil
engineering work and the establishment of cost principles
for projects are essential in today's construction industry.
Approximate estimating
Preliminary estimating
Detailed estimating
Cash flow and income monitoring
Timevalue of money and engineering economics
Life cycle cost analyses
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Civil Engineering Project and Cost Management

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1.2
Cost planning and control
The development of predictive work-breakdown
structures and construction-critical paths for the
construction phase allow design engineers to estimate the
cost of various components of a project reliably, and allow
specific-task risk appreciation.

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Civil Engineering Project and Cost Management

1 Project Cost Management

1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS
Civil engineering projects globally, nationally and
regionally are unique one-of activities to achieve a built
asset end product. Originally, any and all nonmilitary
engineering was deemed to be civil engineering

Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS
All civil engineering projects require the
organisation, control and manipulation of a
workforce, building materials, as well as plant
and machinery to accurately position all
construction components.
The three M's, namely, women and men,
machines and materials or Labour, Equipment
and Materials
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1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS
Civil engineering projects go through several
main phases of development, each of which
must be planned, organised and costed. Phases
include
Concept: The client's recognition and communication
of a specific need
Feasibility: A client consultation process to determine
the scale of requirement and an assessment of
whether funds and motivation exists to continue
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Civil Engineering Project and Cost Management

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1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS

Design: The consultant's explicit representation of a

facility that will satisfy the client's brief
Construction phase: The building of the designed
facility until practical completion and handover
Operational phase: Necessary periodic life cycle
maintenance of the existing facility to ensure its
continuing operational efficiency
End-of-life: Recognition of the work and residual
costs involved in decommissioning/recycling the
components of the built asset
Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS

Civil engineering and building development processes

related to the above phases are often termed as
construction stages:
Briefing stage (related to the concept phase)
Sketch plan stage (linked with feasibility)
Working drawings stage (to clarify the design phase)
Site operations/finalised drawing stages (necessarily
linked to construction)
Life cycle analysis (to encompass costs-in-use/end Asoka Perera
of-life residuals)

Civil Engineering Project and Cost Management

1 Project Cost Management

1.3 COST PREDICTION AND ESTIMATING
IN CIVIL ENGINEERING PROJECTS
Cost management processes are increasingly
important to civil engineers and the projects
that they bring to fruition.

Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

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Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.4 COST ESTIMATING
Once the client has determined that a need
does indeed exist for their proposed built asset,
a design team of consultants are given the goahead to begin to flesh-out the initial concept.

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Civil Engineering Project and Cost Management

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Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.4 COST ESTIMATING
Cost planning and control of the various tasks of a civil
engineering construction project must progressively
(i) confirm the cost limits,
(ii) determine the potential profitability,
(iii) prepare a cost plan of possible design solutions,
(iv) agree on an outline cost plan,
(v) conduct cost checks,
(vi) prepare a detailed cost breakdown and then
(vii) monitor and update all costs and seek to justify
variances between predicted variables and actual
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Civil Engineering Project and Cost Management

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1.5 Approximate Cost Estimating
Upon a client's willingness to proceed beyond
the project concept phase, the design team is
charged with the preparation of an initial
estimate that takes into account current costs
(of labour, plant and materials)

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Civil Engineering Project and Cost Management

1 Project Cost Management

1.5 Approximate Cost Estimating
Upon a client's willingness to proceed beyond
the project concept phase, the design team is
charged with the preparation of an initial
estimate that takes into account current costs
(of labour, plant and materials)
Use of Price Books (In Sri Lanka BSR and HSR)
Other Spons Price Book etc.

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Civil Engineering Project and Cost Management

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1.5 Approximate Cost Estimating
Approximate estimates might be regarded as
having an accuracy of more or less 20%;
House per m2 as Rs.40,000
School per child
Hospital per bed
Road per km
Water tank per m3
We will do an example under Assignment
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Civil Engineering Project and Cost Management

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1.6 Preliminary Cost Estimating
civil engineers require preliminary estimates at the
sketch plan or outline proposal stage to address the
evolving scheme design and ultimately agree on an
outline cost plan with the client.
Preliminary estimates are used to help determine the
relative costs of alternative designs or alternative
scheme proposals to address a client's need(s), and
thus guide the team in deciding on a (practicable)
detailed design.

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Civil Engineering Project and Cost Management

1 Project Cost Management

1.6 Preliminary Cost Estimating
A preliminary estimate, for example, for an earth dam,
might involve a basic assessment of Quantities of
materials involved, with an identification of cost per unit
for rock/clay excavation, transportation and placement
of concrete outlets, spillways and the like
A single-figure percentage additional for feasibility,
investigation and design
Administration and supervision single-figure
percentage additions
A single-figure percentage addition for both
contingencies and market variables
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Civil Engineering Project and Cost Management

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1.6 Preliminary Cost Estimating
Preliminary estimates require some initial design work,
sketch plans, general arrangement make ups and
elemental division consideration (see Preliminary
estimate: Elemental division).
These might be used to allow the calculation of the
major quantities of elements (in substructure
foundations, and in superstructure frames and finishes).
The accuracy of a preliminary estimate might be pegged
at 15% to 20%, although confidence increases with
design detail.
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1.6 Preliminary Cost Estimating: Elemental
Division

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1. Substructure - Demolition, site clearance,

earthworks, foundations
2.
Superstructure Frame, floors, roof, external walls
3.
Internal finishes Wall, floor, ceiling
4.
Fittings and fixtures Internal architecture, painter
work
5.
Services Sanitary, water, heating, airconditioning, mechanical and electrical services
6.
External works Site organisation, drainage,
minor works
Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.6 Preliminary Cost Estimating: Elemental
Division
the design team in reviewing specification alternatives based on
relative cost weightings of the elements
Comparisons of design specifications, and their respective costs,
go towards a process of value management (value engineering) in
which alternative design and specification options (that are
technically compatible) are identified and reviewed in terms of their
fit-for-use installation cost, with future cost-in-use an additional
essential consideration.
The Australian Standard for Value Management (AS 4183-20007),
sets out procedures for the choice of a best (cost) alternative from a
range of (specification) options.
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Civil Engineering Project and Cost Management

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1.6 Preliminary Cost Estimating: Six Steps
Step 1: Review the initial approximate estimate
Step 2: Break down the overall concept into its constituent elemental
divisions.
Step 3: Break down the elemental divisions into basic subelements.
Step 4: Seek to assess a percentage weighting of the value of the
contributory elements based either on experience or any number of
available
Step 5: Consult locally applicable in-house office unit rates (if available)
or price book(s) and cost indices for the respective elements and
subelements, then.
Step 6: Reflect, rationalise and seek to identify a preliminary estimate
based on (sub)element-by-(sub)element design specifications within a
15% to 20% degree of accuracy (acknowledging market, profitability
and price inflation).
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Civil Engineering Project and Cost Management

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1.6 Preliminary Cost Estimating: Example Warehouse
Step 1:
Acknowledge an approximate estimate of
Aus$550/m2
Step 2:
Clarify that a large steel portal frame warehouse of
6000 m2 might be broken down into elemental divisions: 1,
substructure; 2, superstructure; 3, internal-finishes; 4,
fittings/fixtures; 5, services; and 6, external works.
Step 3:
Develop basic design specifications for relevant
subelements such that the substructure might be described in
terms of earthworks (in situ concrete foundations and
associated formwork and reinforcement). The superstructure
might be specified as having precast concrete floors and a steel
frame.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.6 Preliminary Cost Estimating: Example Warehouse
Step 4:
Using (newly developed) design criteria, in-house
experience and building texts, allocate practicable percentage
weightings for the elements such that:
The substructure might be assumed as 20% of the
project's make up (with an extrapolated unit rate of
Aus$550/m2 20% Aus$110/m2).
The superstructure assessed as making-up 55%
(Aus$300/m2).
Internal finishes and fittings contributing only a nominal
amount.
Services (5%) and external works (20%; rated at Aus$30/m2
and Aus$110/m2, respectively).

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Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.6 Preliminary Cost Estimating: Example Warehouse
Step 5:
Develop respective subelement unit rates from inhouse sources or external price books that give an all-in
foundation construction rate of Aus$100/m2 or an equivalency
for an all-in 450 1000-mm-deep foundation rate of GB110/m.
Step 6:
Reflect, rationalise and seek to identify a
preliminary estimate based on (sub)element by (sub)element
design specifications for a large warehouse of 6000 m2 within a
15% to 20% degree of accuracy of, in this example, Aus$3.4M
(in which the substructure is estimated at Aus$0.67M).

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Asoka Perera

Civil Engineering Project and Cost Management

2 Project Cost Management

2.5 Preliminary Cost Estimating: Example Warehouse
Step 5:
Develop respective subelement unit rates from inhouse sources or external price books that give an all-in
foundation construction rate of Aus$100/m2 or an equivalency
for an all-in 450 1000-mm-deep foundation rate of GB110/m.
Step 6:
Reflect, rationalise and seek to identify a
preliminary estimate based on (sub)element by (sub)element
design specifications for a large warehouse of 6000 m2 within a
15% to 20% degree of accuracy of, in this example, Aus$3.4M
(in which the substructure is estimated at Aus$0.67M).

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Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.6 Preliminary Cost Estimating: Example Warehouse
Having established the elemental cost breakdown for
this basic structure, the design team might
subsequently conduct a value management (value
engineering) exercise towards further practicability
assessments of the design at this relatively early
stage.
From the above preliminary estimate, the dominant
cost element for further consideration is the
superstructure.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating
Confirmation of a project's elemental and
subelemental design specifications are finalised
following relevant value management reviews
conducted during the preliminary estimating
stage of development.
Alongside subsequent detailed final design
drawings and final specification choices, a
detailed estimate of cost is prepared.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating
A detailed estimate is prepared to facilitate the tendering
process.
The detailed estimate to allow future comparison with
the builders invited to tender for (and to submit a bid to
construct) the construction project.
On the other hand, firms keen to be chosen as the
contractor to construct the design, will prepare their
own builder's detailed estimate of the cost of the work
on which a percentage for profit is added.

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1.7 Detail Cost Estimating

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To assist in periodic interim payments for work done onsite and project stages completed.
A civil engineering standard method of measurement is
adopted to itemise the project into its constituent parts.
Bills of Quantities (BQs) or Bills of Approximate
Quantities is prepared.
BQ item descriptions provide
a standard explanation of the nature and quantity
the type and quality of the
the specification document, describe installation with
reference to technical (national) standards Asoka Perera

Civil Engineering Project and Cost Management

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1.7 Detail Cost Estimating
A typical BQ item, in which Rs. 16,750 is the cost to
excavate 25 m3 of general material to a depth of 1.5 m,
at a unit rate of Rs.670/m3, can be represented in a BQ
document in a standard format with reference to the
Civil Engineering Standard Method of Measurement
(CESMM or SLS 576) as follows:

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Civil Engineering Project and Cost Management

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1.7 Detail Cost Estimating
The first column allows a cross-reference to
the CESMM standard, where E signifies
earthworks, 4 identifies the first division
classification of general excavation, 2
describes a second division subcategory of soil
type and 4 describes the third division depth
category of less than 2 m. The second column
describes this in words.
The quantities column-amount of 25 m3 is
measured from a design drawing.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating
The first column allows a cross-reference to
the SLS 576 or CESMM standard, where E
signifies earthworks, 4 identifies the first
division classification of general excavation, 2
describes a second division subcategory of soil
type and 4 describes the third division depth
category of less than 2 m. The second column
describes this in words.
The quantities column-amount of 25 m3 is
measured from a design drawing.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating
The unit rate column-amount of Aus$6.50 requires to
be built up from an amalgamation of labour, plant and
materials cost estimates (often with item-by-item, singlefigure percentage additions for overheads and profit,
respectively).

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Labour costs include fitting and fixing materials and goods in

position.
Hourly rate output a worker/gang can complete in 1 h.
Materials and goods costs include delivery to site, unloading,
handling/stacking and storage costs, as well as cutting and any
resultant waste.
Plant costs are based on equipment to construct, fit and fix the
machine hire (or purchase rate) with required.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating
The efficiency rate for a unit of work done is
referred to as gang-hours the time taken to do a
unit-amount of a task .
The total cost to excavate (Rs.670/m3) is broken
down into
Plant:
Rs. 2400/h 0.05 h/m3 = Rs. 120.0/m3

Labour: Operator + Nominal unskilled labour

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Rs900/h 0.05 h/m3 = Rs.45.0/m3

Material installation: nil

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Civil Engineering Project and Cost Management

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Civil Engineering Project and Cost Management

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Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating : Example
The six steps to addressing detailed estimates (to
finalise a project's cost parameters) are as follows:

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Step 1:
Review the preliminary estimate
Step 2:
Ensure that key items have been described in a
standard format to reflect civil engineering standard methods
of measurement.
Step 3:
Develop from in-house sources, external price
books and construction texts, a range of work task gang-hour
efficiencies and unit rates for respective all-in labour, plant
and material costs; wherever possible, validate data by
industry supplier quotations and time-and-motion studies of
on-site production rates (generally, work efficiencies for
method-related tasks might be gleaned from experience or
from any available texts).
Asoka Perera

Civil Engineering Project and Cost Management

1 Project Cost Management

1.7 Detail Cost Estimating : Example
The six steps to addressing detailed estimates (to
finalise a project's cost parameters) are as follows:
Step 4:
Prepare a tabulated method statement of the
task(s); broken down into respective labour, plant and
material components where applicable. Overheads and profit
are added item-by-item in recognition that each work task has
differing associated risks, safety provisions and profitability
potential. To address Operational Health
Step 5:
Input costs into the tabulated work breakdown
structure of project tasks
Step 6:
Review and update the item descriptions generated
in step 2 above.
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Civil Engineering Project and Cost Management

1 Project Cost Management

1.8 Cost Plan inclusions
In addition to measured operations related to
work on-site, cost plans (and final BQs) require
the consideration, review and inclusions of
other areas liable to contribute to any
expenditure set aside for project participation.
Specific contingencies: Costs related to
particular activities to cover the cost of extra
work not foreseen at the design stage for rock,
flooding and the like
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Civil Engineering Project and Cost Management

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1.8 Cost Plan inclusions
Indirect costs: Percentage spread of nonproject
overheads such as accounting services, running the
main office with indirect labour (receptionists and the
like), advertising, telephones, travel and indirect
resources (company cars), as well as indirect cost such
as recruitment and human resources services
Markup: Assessment of extent to which unit rates reflect
both profit percentage established by senior
management and direct overheads (of fencing, site
utility electricity and water, along with site cleaning and
debris removal)
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Civil Engineering Project and Cost Management

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1.8 Cost Plan inclusions
Value Added Tax (VAT)

Other cost under several general headings that

include:

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Preliminary items
Preamble items
Prime costs
Provisional sums
Contingency sums
Profitability mark up
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Civil Engineering Project and Cost Management

THANK YOU
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Asoka Perera