COST- ESTIMATE

What is Estimate?

An estimate for any construction work may be defined as the process of

calculating the quantities and costs of the various items required in connection
with the work.
What is Cost- Estimate?

Cost estimate in project management is the process of forecasting the

cost and other resources needed to complete a project within a defined
scope. Cost estimate accounts for each element required for the project
and calculates a total amount that determines a project’s budget.
 An estimate is prepared by calculating the quantities from the drawings for various items and
multiplying them with the unit cost of the item concerned. To prepare an estimate one requires -
• Drawing - The drawing is the basis from which quantities of various items for a work are
calculated. The drawings consist of the plan, the elevations, and the sections through
important points.
• Specifications -
General Specification - The general specification forms the general idea for the project. In
this, the nature and class of work and the names of materials that should be used are described.
Detailed Specification - Detailed specification describes every item of work in the estimate.
This specification of work serves as a guide to execute the work to the owner's satisfaction.
• Rates - Rates for different items of works are vital factors to determine the estimated cost.
• Standing circulars for taxes and insurance etc. are required to fix up rates of those items
which are not in the schedule of rates.
Purpose of Estimation

Estimate for a work or project is necessary mainly for the following purposes:
1. To ascertain the necessary amount of money required by the owner to complete the proposed
project. For public construction works, estimates are required in order to obtain administrative
approval, allotment of funds, and technical sanctions.
2. Ascertain quantities of materials required to program their timely procurement.
3. Calculate the number of workers that are to be employed to complete the work within the
scheduled time of completion.
4. Assess the requirements of tools and equipment required to complete the work according to
the program. Fix up the completion period from the volume of works involved in the estimate.
5. Draw up a construction schedule and program.
6. Justify the investment from the benefit-cost ratio.
7. Invite tenders and prepare bills for payment.
8. An estimation for an existing property is required for valuation.
Different Types of
COST- ESTIMATE
1. Detailed Estimate
This includes the detailed particulars for the quantities, rates, and costs of all the items involved
for the satisfactory completion of a project. This is the best and the most accurate estimate that can
be prepared.

A detailed estimate is accompanied by -

 Report,
 Specifications,
 Detailed drawings showing plans,
 Design data and calculations and,
 Basis of rates adopted in the estimate.
Such a detailed estimate is prepared for technical sanction, administrative approval, and also
for the execution of a contract with the contractor.
2. Preliminary or Approximate or Rough Estimate
This is an approximate estimate to determine an approximate cost in a short time and thus enables
the authority concerned to consider the financial aspect of the scheme, for according sanction to the
same. Such an estimate is framed after knowing the rate of similar works and from practical knowledge
in various ways for various types of works.

3. Quantity Estimate or Quantity Survey

This is a complete estimate or list of quantities for all work items required to complete the concerned
project. The quantity of each item of work is worked out from the respective dimensions on the drawing
of the structure.
The purpose of the Bill of quantities is to provide a complete list of quantities necessary for the
completion of any engineering project, and when priced, it gives the estimated cost of the project.
4. Revised Estimate
A revised estimate is a detailed estimate of the revised quantities and rates of items of works
originally provided in the estimate without material deviations of a structural nature from the design
originally approved for a project. It is accompanied by a comparative statement abstract form showing
the probable variations for quantity, rate, and amount for each item of work of the project compared
with the original estimate side-by-side stating the reasons for variations. For fresh technical sanction,
a revised estimate is prepared and submitted.

5. Supplementary Estimate
During the progress of the work, some modifications or additions due to material deviation of a
structural nature from the design originally approved may be thought necessary for the development
of a project. A supplementary estimate includes all such works. The method of preparation is the same
as that of a detailed estimate, and it should be accompanied by a full report of the circumstances
which render its necessity.
6. Complete Estimate
The complete estimate is related to the work in addition to the main contract or to the 'detailed
estimate.'

7. Annual Maintenance or Repair Estimate

After completion of a work, it is necessary to keep the maintenance aspect in view for its proper
functioning. An estimate is prepared for the items which require renewal, replacement, repairs, etc.
for maintenance purpose. The total estimated cost of maintenance of a structure is generally kept
within the prescribed limits on the percentage basis of the cost of construction of the structure and its
importance. This cost can vary according to the age and importance of the structure.
Construction Report
What is Construction Report?
• CONSTRUCTION REPORTS ARE DOCUMENTS THAT
SUMMARISE OR PROVIDE INFORMATION ABOUT KEY EVENTS,
PROJECT STATUS OR PROCESSES TO A CLIENT, LOCAL
AUTHORITY, PURCHASER AND SO ON.
Types of Construction
Reports
1. PROGRESS REPORTS
2. COST REPORTS
3. MATERIALS REPORTS
4. MARKET TREND REPORTS
Progress Reports
PROGRESS REPORTING SUMMARISES THE DEVELOPMENT
AND CURRENT STATUS OF A PROJECT. THIS IS USUALLY
DONE AT REGULAR INTERVALS TO HELP CONTRACTORS
UNDERSTAND EXACTLY WHERE THEY ARE ACCORDING
TO THE SCHEDULE.
PROGRESS REPORTS USUALLY COVER THE FOLLOWING ITEMS:
• MATERIALS ORDERED
• EQUIPMENT DELIVERED
• SCHEDULED LABOUR HOURS
• COMPLETED LABOUR HOURS
• ESTIMATED COSTS
• ACTUAL COSTS
• PAYMENTS RECEIVED
• PAYMENTS DUE
• STATUS OF SUBMITTALS
• STATUS OF FINAL INSPECTIONS
• ANY OTHER IMPORTANT INFORMATION RELATED TO THE
PROGRESS SCHEDULE
Cost Reports
A COST REPORT PROVIDES DETAILED FINANCIAL DATA
ABOUT A PROJECT. IT INCLUDES INFORMATION ABOUT
THE MATERIALS USED, LABOUR HOURS SPENT, AND ANY
OTHER EXPENSES INCURRED.
Materials Reports
A MATERIALS REPORT SUMMARISES THE QUANTITY AND
QUALITY OF MATERIALS USED DURING A PROJECT. THIS
MAY INCLUDE INFORMATION ABOUT THE TYPES OF
MATERIALS USED, THEIR PRICES, AND THEIR SOURCES.
Market Trend Reports
A TREND REPORT SUMMARISES RECENT TRENDS IN THE
INDUSTRY. FOR EXAMPLE, IT MIGHT SHOW WHICH MATERIALS
ARE MOST POPULAR AMONG CONTRACTORS TODAY.
TREND REPORTS ARE USEFUL BECAUSE THEY HELP YOU
IDENTIFY NEW PRODUCTS AND TECHNOLOGIES THAT COULD
BENEFIT YOUR PROJECTS.
Why is Construction
Report Important?
• CONSTRUCTION REPORTING MAKES SURE THAT
WORKERS ARE AWARE OF EVERY JOB THAT NEEDS TO BE
DONE, AND WHAT THE STATUS OF THESE JOBS IS.
• CONSTRUCTION REPORTING ALSO MAKES SURE THAT NO
QUESTIONS ARE LEFT UNANSWERED.
 VALUE
ENGINEERING
What is VALUE ENGINEERING?
• It is a methodology used to analyze the function of the goods and services
and to obtain the required functions of the user at the lowest total cost
without reducing the necessary quality of performance.(Indian Journal of
Science and Technology)
• It is an organized, creative and cost search technique for analyzing the
function of any product, service, or system with the purpose of achieving
the required functions at the lowest overall cost consistent with all the
requirements that comprise its value, such as performance, quality,
reliability and appearance.
What is VALUE ENGINEERING?
• The implementation, which could cover every department and may
include prototyping, modelling and testing, must then be monitored
and checked to ensure that the exercise has indeed increased the
function/cost ratio. This process is called value analysis.
• Value Engineering involves cost reduction by improved functionality
through lesser energy consumption through: Manpower, Materials,
and Machines.
The activities involving value engineering in construction are the
following:
• Material availability
• Methods of construction
• Transportation issues
• Site limitations or restrictions
• Planning and organization
• Costs
• Profits
VALUE ENGINEERING PROCESS
• The process of value engineering was made for BIM (Building
Information Modeling) since accurate cost information can be
obtained and tweaked until design and cost and schedule can be
evaluated quickly and with some assurance of accuracy.
• Function Analysis System Technique (FAST) is a technique to
systemize or structure the value-engineering process which define
the following stages:
VALUE ENGINEERING PROCESS

1. Collect and collate all the information available.

The Project Manager and the potential client are having a first briefing by the V.E.
Facilitator to discuss if a V.E study is needed and how it can be applied to support the
potential project. If there is an agreement, a first planning meeting takes place. This
meeting aims to set the objectives for the study and to identify the constraints.
 The needs for the project
 The scope
 The deliverables
 The key functions and risks.
VALUE ENGINEERING PROCESS

2. Carry out a functional analysis. This breaks down the products

/materials into its components and the function of each component is defined.
The appropriate noun can then be added to enable a cost value to be
ascertained. Each function and component can now be given a cost value and
its percentage of the total cost calculated.

3. Find alternative solutions.

4. Evaluation. The suggested changes are now costed and analyzed for a
possible saving and the function/cost ratio compared with the original design.
VALUE ENGINEERING PROCESS

5. Acceptance. The proposed changes must now be approved by management

in terms of additional capital expenditure, marketability, sales potential,
customer response, etc.

6. Implementation. This is the production and distribution stage.

7. Audit. This is carried out after the product has been on the market for a
predetermined time and will confirm (or otherwise) that the exercise has
indeed given the perceived additional value or function/cost ratio. If the
results were negative, the process may have to be repeated.